. ’ 

The Attorney General of Texas 

July 19: 1982 

MARK WHITE 

Attorney General 

Supreme Court Building 

P. 0. Box 12546 

AUS,,“, TX. 76711. 2546 

5121475-2501 

Telex QlOl674~1M7 

Telecopier 5124475-0266 

1607 Main St., Suite 1400 

Dallas. TX. 75201-4709 

2141742.6944 

4624 Alberta Ave.. Suite 160 

El Paso. TX. 79905.2793 

9151533.3481 

1220 Dallas Ave.. Suite 202 

Houston. TX. 770026966 

7131650~3666 

606 Broadway, Suite 312 

Lubbock. TX. 79401.3479 

606i747.5236 

4308 N. Tenth. Suite B 

McAllen. TX. 76501.1685 

51216824547 

200 Main Plaza. Suite 400 

San Antonio. TX. 76205.2797 

512/225-4191 

An Equal Opportunity! 

Afflrmatl~e Action Employer 

Eonarable Stan Schlueter 

Chairman 

Opinion No. k%A96 

Committee on Financial Institutions Re: Construction of House 

Texas House of Representatives Bill No. 1208 

P. 0. Box 2910 

Austin, Texas 78769 

Dear Representative Schlueter: 

You have requested our opinion regarding the interpretation of 

House Bill No. 1208, passed by the Sixty-seventh Legislature and 

codified as article 2529b-1. V.T.C.S. You first ask: 

May securities pledged to eecure public 

deposits pursuant to House Bill No. 1208 be 

pledged to the full extent of market value? 

Section 2 of article 2529b-1 clearly states, in pertinent part: 

Investment securities or any ownership or 

beneficial interest [tlherein shall be eligible 

and lawful security for all deposits of public 

funds of the State of Texas and anv uublic anencv - . 

to the extent of the market value the;eof: 

(Emphasis added). 

Prior to the enactment of this bill, our laws had differing valuation 

rules for various types of depositories. One obvious intent of 

article 2529b-1 was to remove those differences by stating a uniform 

rule. Texas courts have long recognized a fundamental rule of 

statutory construction. set out in Mlngus v. Kadane, 125 S.W.2d 630, 

631 (Tex. Civ. App. - Fort Worth 1939, writ dism’d judgmt. car.). 

wherein the court cites volume 59, page 910 of Corpus Juris, stating: 

Where two legislative acts are repugnant to, or in 

conflict with, each other, the one last passed, 

being the latest expression of the legislative 

will, will, although it contains no repealing 

clause, govern, control, or prevail, so as to 

supercede and impliedly repeal the earlier act to 

the extent of the repugnancy. 

p. 1772 
Honorable Stan Schlueter - Page 2 W-496) 

c 

Article 2529, V.T.C.S.. most recently amended in 1967. see Acts 

1967, 60th Leg., ch. 738, at 1991, enumerates the securitieshat a 

bank may pledge as security for state funds in order to qualify as a 

state depository. This statute then provides as follows: 

All of such securities may be accepted by the 

[State Depository] Board, provided the aggregate 

amount thereof is not less than twenty per cent 

(20%) greater than the total amount of state funds 

that they secure; provided that the amount of all 

bonds and other obligations offered as collateral 

shall be determined by the Board on the basis of 

either their par or market value, whichever is 

less. 

Article 2529b-1 was enacted in 1981. This statute does not have a 

repealer clause, but section 3 provides as follows: 

The provisions of this Act shall be cumulative 

of all other existing laws, but shall be full and 

complete authority for investment securities to be 

eligible to secure public funds without reference 

to any other law. (Emphasis added). 

Article 2529b-1 does not repeal in toto any prior statutes 

relating to security for public deposits. However, considering the 

general rule followed in Mingus, it is clear that any prior 

conflicting statutory provisions regarding valuation of pledge 

securities were repealed by the enactment of this statute. It 

provides that “[i] nvestment securities... shall be eligible and lawful 

security for all deposits of public funds... to the extent of the 

market value thereof .‘I E2. “Investment securities” include 

government securities and obligations issued by a public agency. The 

terms “government securities” and “public agency” are defined in 

section 1 of article 2529b-1. 

Consequently, the securities included within the definitions of 

“[l]nvestment securities” in the later enacted statute are lawful 

security for the deposit of public funds “to the extent of.. . market 

value. ” Securities, if any, that are not included within the 

definition of “[iInvestment securities” inarticle 2529b-1 and that 

are specifically listed in article 2529 are to be valued at “either 

their par or market value, whichever is less.” 

The Sixty-seventh Legislature also passed another statute with 

similar provisions. House Bill No. 2050, entitled the Bond Procedures 

Act of 1981 and codified as article 717k-6, V.T.C.S.. was passed and 

became effective only days after House Bill No. 1208. House Bill No. 

2050 has broader definitions of issuers of public securities and those 

p. 1773 
. 

. * 

Honorable Stan Schlueter - Page 3 (MU-496) 

securities eligible to pledge against deposits of public funds than 

House Bill No. 1208, but has the same valuation rule wherein it 

states: 

Said bonds also are eligible to secure 

deposits of any public funds of the state or any 

political subdivision or public agency of the 

state, and are lawful and sufficient security for 

the deposits to the extent of their market value, 

when accompanied by any “nmatured coupons attached 

to the bonds. (Emphasis added). 

V.T.C.S. art. 717k-6, 09. Thus. House Bill No. 2050 reiterates the 

legislature’s will that “market value” be the rule for valuation of 

eligible securities pledged to secure public deposits. 

Even though article 2529b-1 now directs the State Depository 

Board to value pledged securities “to the extent of the market value 

thereof ,‘I the board retains the power “to reject any and all 

collateral or surety bonds tendered by a state depository, without 

assigning any reason therefor,” and its action in doing so is final 

and not subject to review. V.T.C.S. art. 2529. Moreover, any 

securities pledged by a depository are subject to the following 

provision of article 2529. V.T.C.S.: 

In the event the market value of the securities 

pledged by any depository shall decrease to the 

point where the collateral value of said 

securities, as fixed by the Board, is less than 

the amount of said funds on deposit in said 

depository, the Board shall require additional 

security in order to equalize such depreciation. 

Your second question relates to the form of such securities. You 

specifically have asked: 

Are bonds, fully registered, registered as to 

principal only and bonds registered as to interest 

only eligible to secure deposits under House Bill 

No. 1208? 

The term “fully registrable” means, with reference to public 

securities, that both the principal and interest of such securities 

are payable only to the registered owner thereof. V.T.C.S. art. 715b. 

§2(2). Public securities may be issued in a form that makes them 

either unregistrable, fully registrable or registrable as to principal 

only. Id. 13. 

- See also V.T.C.S. art. 717k-6, 94. 

House Bill No. 1208 contains no limitations on the form of the 

investment securities eligible to secure public deposits. House Bill 

No. 2050 provides: 

p. 1774 
. 

Honorable Stan Schlueter - Page 4 (MW-496) 

Sec. 4. The governing body of any issuer is 

authorized to issue bonds and the interest coupons 

appertaining thereto, if any, in such form or 

forms, with provision for registering such bonds 

as to principal or as to principal and interest, 

or with provision for changing the form or forms 

of such bonds and interest coupons, if any, in 

such manner as shall be specified by the governing 

body of the issuer in the resolution, order, 

ordinance, or other proceedings authorizing the 

bonds. 

Sec. 5. The governing body of any issuer ia, 

authorized to issue bonds constituting a series of 

any number of bonds, or a single bond, payable in 

one stated amount or in stated installments to the 

bearer, or to a registered or a named payee, or to 

the order of, or to the successors or assigns of, 

such registered or named payee, and provision may 

be made for the conversion of any bond or interest 

coupon, upon request or demand of the bearer... 

registrable as to principal or as to principal and 

interest, or into fully registered bonds without 

interest coupons, or into any other form.... 

(Emphasis added). 

V.T.C.S. art. 717k-6. %%4. 5. Thus, House Bill No. 2050 is virtually 

limitless as to the form of the eligible securities. Such securities 

are eligible to be pledged in bearer form with coupons attached 

registered as to principal or as to principal and interest, or into 

fully registered bonds without interest coupons, or in any other form 

authorized by the governing body of the issuer. 

SUMMARY 

Securities pledged to secure public deposits 

pursuant to article 2529b-1 may be pledged to the 

full extent of their market value. They are 

eligible to be pledged in bearer form with coupons 

attached, registered as to principal or as to 

principal and interest, or into fully registered 

bonds without interest coupons, or in any other 

form authorized by the governing body of the 

issuer. 

M@ 

Attorney General of Texas 

p. 1775 
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. . * 

Honorable Stan Schlueter - Page 5 (t-w496) 

JOHN W. FAINTER, JR. 

First Assistant Attorney General 

RICHARD E. GRAY III 

Executive Assistant Attorney General 

Prepared by Ladd D. Pat1110 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Susan L. Garrison, Chairman 

Rick Gilpin 

Patricia Hinojosa 

Ladd D. Pat1110 

p. 1776