### R-940

OFFICE OF 

# THEATTORNEY 

# GENERAL

December 2, 1947

Hon. J. M. Faulkner, Ranking Commissioner, Austin, Texas OpinionNo. V-445
Re: Insuredmortgage loans - Eligibility of for State banks. Dear Sir:
Your request for an opinion by this department upon the above subjectmatter is accompaniedby a letter fromMr. L. J. Cappleman, State Director, United States Department of Agriculture, Farmers’ Home Adminigistration,

Dallas, Texas,~

fromwhich we quote as fol- :
“I am sendingyou a copy of,Section 371, Title 12, United States Code, rihich provides for themaking of insuredmortgate loans through the Federal Reserve Aot.
. . .”
“We trustyou will be able togive us your opinionwithin a short time and will notify the officers of the State banks of Texas concerning their eligibility, and we in turnwill pass the information to our Supervisors in order that theymay discuss thematter with bankers in their respeotive counties.” Artiole 342-504 (Vernon’sCodification) of the Texas Ranking Code defines the eligibilityof real estate ‘loansor investments for State banks. The subject seouritiesare not there embraced.

Artiole 342-511 of the Code, however, is as follows: “Any provisions of thisCode to the aontrarynotwithstanding,any State bank may make any loan or investmentwhich suoh bank could.makewere it operatingas a national bank, and themaking of suoh -‘loanor investment shall not constituteHon. J. Id.Faulkner - Page 2 (V-445)

a violation of any penal provision of the stxtutes of the State."
In OpinionNo. O-6809by 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 dealswith the subject of eligible loans for investments for State banks, and therefore is in pari materia with the priorArticles 501, 502, 503, 504, 505 and 506 of ChapterV--all dealing with the same subject, though for themost part ,bynegation. The common subject to which all theseArticles relate is eligibility of investments.Articles 511 and 507have 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 conferredupon 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 thewhole 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 everyportion thereof as an integralpart of the law governing the particular inquiry. Article 4 would, if standingalone, exclude the character of investmentspermitted by Article 11. But it does not standalone; 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 connectionwith Article 4 as though the same had been actually incorporated inthatEon. J. ,Ih. Faulkner.? Page 3 

### W-445)

Article as, indeed it is, a proviso." Such farm'mortgage insurance loans are eligible for national banks aswe understand it.

Fr?m what :':e

have said it follows that the insuredmortgage loans of Section 

### 371,Title 12, United States Code, are eli(~r,ible investrlents

for Texas State banks. SUMMARY

Insuredmortr,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, ChapterV, of the Texas F3ankinf: Code.
Yours very truly,

0S:wb ATTORhXY GXWRAL

BY Assistant

APPROVED: