The Attorney General of Texas 

May 5, 1983 

JIM MATTOX 

Attorney General 

Supreme Court Building 

I’ 0. Box 12546 

Austin. TX. 76711. 2546 

5121475-2501 

Telex 910/8741367 

Telecopier 5121475-0266 

1607 Main St., Suite 1400 

Dallas, TX. 75201.4709 

2141742-6944 

4624 Alberta Ave.. Suite 160 

El Paso, TX. 799052793 

915/533-3464 

,- 

10 Dallas Ave.. Suite 202 

Housfon. TX. 77002-6966 

713/650-0666 

606 Broadway, Suite 312 

Lubbock. TX. 79401-3479 

6061747-5236 

4309 N. Tenth, Suite 6 

McA,,en. TX. 76501-1685 

5121682-4547 

200 Main Plaza. Suite 400 

San Antonio, TX. 76205.2797 

5121225-4191 

An Equal Opportunity/ 

Affirmative Action Employer 

Honorable Warren New 

Yoakum County Attorney 

P. 0. Box 359 

Plains, Texas 79355 

Opinion No. JM-29 

Re: Whether article 2529c, 

V.T.C.S., authorizes a city to 

contract with a depository bank 

when a majority of the city 

COUIlCil members are stockholders in the bank 

Dear Mr. New: 

You ask whether the city council of a general law city is 

prohibited from entering into a depository contract with a bank when a 

majority of the city council members are stockholders in that 

depository bank. We conclude that, in the situation you describe, the 

city council of a general law city is prohibited from entering into 

such a contract. 

You suggest that, by entering into the contract, the city council 

has violated articles 2529c and 988, V.T.C.S., as well as section 

39.01 of the Penal Code. Article 2529c, V.T.C.S., governs the 

selection and qualification of depositories of state agencies and 

political subdivisions; it will be discussed later. Section 39.01 of 

the Penal Code provides that a public servant commits an offense if he 

knowingly or intentionally engages in official misconduct. Because a 

determination of whether section 39.01 has been violated in this 

instance necessarily requires the resolution of disputed matters of 

fact, we will not address that issue in this opinion. 

Article 2529c, V.T.C.S., governs the selection and qualification 

of depositories of state agencies and political subdivisions and 

provides at section 2 the following in pertinent part: 

A bank shall not be disqualified from bidding 

and becoming the depository for any agency or 

political subdivision of the state by reason of 

having one or more officers, directors or stockholders of said bank who individually or collectively own or have a beneficial interest in not more 

than 10 percent of the bank's outstanding capital 

stock, and at the same time serves as a member of 

the board, commission, or other body charged by 

law with the duty of selecting the depository of 

such state agency or political subdivision; 

p. 126 
Honorable Warren New - Page 2 (JM-29) 

provided, however, that said bank must be selected 

as the depository by a majority vote of the 

members of the board, commission, or other body of 

such agency or political subdivision and no member 

thereof who is an officer, director or stockholder 

of the bank shall vote or participate in the 

proceedings. (Emphasis added). 

The statute requires that a depository bank be selected by the 

vote of a majority of board members. All stockholders in a bank are 

disqualified from voting in favor of it. On the facts you present, a 

majority of the council members were disqualified from voting to 

choose as depository the bank in which they owned stock. Thus, the 

action taken by the city council members is manifestly in violation of 

the statute. 

We therefore conclude that the city council of a general law city 

is prohibited by article 2529c, V.T.C.S., from entering into a 

depository contract with a bank when a majority of the city council 

members are stockholders in that bank. 

SUMMARY 

The city council of a general law city is 

prohibited by article 2529c, V.T.C.S., from 

entering into a depository contract with a bank 

when a majority of the city council members are 

stockholders in that bank. 

JIM MATTOX 

Attorney General of Texas 

TOM GREEN 

First Assistant Attorney General 

DAVID R. RICHARDS 

Executive Assistant Attorney General 

Prepared by Jim Moellinger 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Susan L. Garrison, Chairman 

Jon Bible 

Rick Gilpin 

Jim Moellinger 

Charmaine Rhodes 

Nancy Sutton 

p. 127