GERALD C. MANN

Honoreb&e J; F. Holubec Ctititg~Auai~or Lavaca County Hallettsville,Texas

Dear 3lr: OpinionNo. O-5010 Re: Can the commissioners'court of a county legallypay to a Depository for county and school funds an amount of money as a service charge to the bank acting as suchDepository, and other related questions?

Your letter ofDecember 8, 1942, raquest'ng the opinion of this department on the questions stated',therein reads in part as follows:

"Pleasegive me your opinion on the following:

"'Can the Commissioners Court of a county legally pay to a Depository for County and School Funds an amount of money as a service charge to the Bank acting as suchDepository, and if so, can suchmoney be prorated to the various funds of the County and the funds of the various School Districts, or must such payment, if permitted to be paid, be taken out of the General Fund of the County? "Explanatorywish to state that in Lavaca Countywe are confrontedwith a peculiar situation and that is thatwe are not apt to get a bid for County ana SchoolDepository for 194X-44 as no bank desires to be depository because they all claim itmeans a loss to them because of the restrictionsplaced upon banks by the Federal Government inmaking loans, and further the fluctuating market on securities that theywill be compelled to put up as security for the County and School Funds, which may likely result in a loss to them.
"The laws,relatingto CountyDepository are Art. 2544, 45-46-47, etc.Konorable J. F. Holubec, page 2 O-5010

"Art. 2550. Deposits not applied for: "Under this 1ast~Article it says that the CommissionersCourt shallhave the power, and it shall be their duty to deposit the funds of the Countywith any one or more banking corporations, etc.--Any bank,or banking cbncern receivingDeposits under this Article,shall executea bona in the manner and form provided for depositories of county funds, etc.
"TheArticle seem8 very simple,but there is no way in compellinga Bank under the circumstances of Art. 2550 to execute a bond.
"Thebiggest objection that the Banks have Is the enormcius

work necessary in keeping the School Funds.

Chapter 2,.Title 47,Vernon's Annotated Civil Statutes contains the statutespertaining to county depositories. Article 2549 (Vernon'sAnnotated Civil Statutes) provides in part: ,I

OS... All countydepositories shall collect all checks,drafts and demands for monev so deposited with them by the county and when using due diligence shall not be liable on such collectionsuntil the proceeds thereof have been duly receivedby the aepositorybank, provided that any expense incurred in collection thereof by the depository,which'ths depository is not allowed or permitted to pay or absorb by reason of any act of Congress of the United States or any regulationby either the Board of Governors of the Federal Reserve System or the Board ofDirectors of the FederalDeposit InsuranceCorporat$on, shallbe charged to and paid by the county.

. . . It is a well establishedprinciple of law that commissioners'courts are courts of limited juriscliction, in that their authority extends only to matters pertaining to the generalwelfare of the respective counties and that their powers are only those expressly or impliedly conferred upon them by law, that is, by the Constitutionand statutes of the state.

We have been Unable to find any statute or constitutionalprovision authorizing the commissioners'court of a county to legallypay to a countydepository any amount ofHonorable J. F. Holubec, page 3 o-5010

money as a service charge to the bank acting as suchdepository, exceptany expense incurred in collection of such proceeds by the depository,which the depository is not allowed or permitted to pay or absorb by reason of any act of Congress of the United States or any regulationby either the Board of Governors of the Federal Reserve System or the Board ofDirectors oftthe Federal ,DepositInsurance Corporation,Article 2549, supra, expresslyprovides that such expenses so incurred shall be paid by the county. Therefore, in view of the foregoing statuteyour first question is respectfullyanswered in the negative, subject to the exceptionheretoforementioned. This opinion is not to be construed that the above mentioned expenses are's service charge,but is to be construedas merely holding that the county Is authorized to pay such expenses.

As we have answered your first question in the negative your secondquestion contained In the first paragraph of your letterwhich reads:

II

. . .can suchmoney be prorated to the various funds of the County and the funds of the variousSchool Districts, or must such payment, if permitted to be paid, be taken out of the General Fund of the County?" requires no answer.

Article 2550,Vernon's Annotated Civil Statutes provides:
"If for any reason no applicationsare submitted by any banking corporation,association or individualbanker to act as countydepository or in case all applications shallbe declined, then in any such case, the Commissioners Court shall have the power, and it shall be theirduty to deposit the funds of the countywith any one or more banking corporations,associations or individual bankers in the county or in the adjoining counties in such amounts and for suchperiods as may be deemed advisableby the Court. Any bank or banking concern receivingdeposits under this Article shall executea bond in the manner and form provided for depositories of county fundswith all the ConditiOns provided for same, the penalty of saidbonds to be not less than the total amount of county funds deposited with such bank or banking concern. Acts 1905,p. 393; Acts 1917, p. 19; Acts 19% 44th Leg., p. 394, ch. 152, 8 1; 1 Acts 1937, 45th Leg., p. 1298, ch. 484, 9 1.”Honorable J. F. Holubec, page 4 O-5010

It will be noted that under the provisions of the foregoing statutewhere no applications are submittedby any banking corporation,association or indiviaualbanker to act as county depository or in case all applicationsare declined, then in any such case, the commissioners'court shallhave the power, and it shallbe their duty to deposit the funds of the countywith anyone'ormores banking corporations,associations or individualbankersin the county or in adjoining counties in such amounts and for suchperiods as may be deemed advisableby the court. Said statute furtherprovides in part "Anybank or banking concern receivingdeposits under " this Article shall execute a bond in the manner and form provided for depositories of county fundswith all the conditions provided for same, the penalty of said bonds to be not less than the total amount of county funds depositedwith such bank or banking concern."

It is our opinionwhere any banking corporation, association or individualbanker accepts any county funds as authorizedby Article 2550, supra, saidbanking corporation, association or indiviaualbanker is required to execute the bond or bonds mentioned therein. Where such banking corporation, association or individualbanker acts as county depository for the public funds of a county the law imposes upon them all the duties of a fully qualified and regularly appointed county depository (NewAnsterdam Casualty Company v, First National Bank of Gilmer, Texas, et al., 134 S. W. (2) 470; Sullivan v. City of Galveston, 17 S.W. (2) 478, affirmed Texas Commission of Appeals, 34 S. W. (2) 808; Fidelity and Deposit Company of Maryland v. Missouri State Bank, 44 Fed. (2) 19).

Where there has been no selection of the county aepositorg for trust funds, Section 14 of Article 2558a,Vernon's Annotated Civil Statutes,provides in effect that each county or district clerk having the custodyby law of any money, evidence of debt, script, instrumentof writing, or other legal proceeding, shall sealup in a securepackage the identical money or other article received by him and deposit the same in some iron safe or bank vault.

Trusting that the foregoing fully answers your inquiry, we are--- -

Honorable J. F. Holubec, page 5 O-5010

Yours very truly

ATTORNEY GENERAL OF TEXAS

By s/ArdellWilliams Ardell Williams AssIstant
AW:mp:wc

APPROVEDDEC 21, 1942 s/Gerald C. Mann ATTORNEY GENERAL OF TFXAS
This Opinion ConsideredAnd Approved In Limlted Conference