., - 

Ron. Lee Brady, Commissioner Opinion No. O-2641 

Department of Banking Re: Appropriation to State 

Austin, Texas Banking Department - Senate 

Bill 427, ,Acts 46th LegisDear Sir: lature. 

In your letter of ,August 16, 1940, you request the 

opinion of this department upon the following question: 

1. Are expenditures in the supervision of 

any one class of corporation (under the supervision of the Banking Department), limited to fees 

collected from that class of corporation? 

2. Are expenditures under Item ‘7 (of the 

appropriation to the State Banking Department 

Senate Bill 427, Acts of the 46th Legislature 5 , 

under the sub-caption “Loan and Brokerage Division” being a $19,000 appropriation labeled “Traveling Expense, Banking Department” limited to the 

payment of traveling expense incurred in loan and 

brokerage companies, or may it be used to pay the 

expense of travel in supervision of banks? 

3. Is Item 8 (of the same appropriation) following Item 7 above mentioned, limited to the payment of premiums on bonds of employees charged with 

supervision of loan and brokerage companies? 

As you state, the Banking Department is charged with 

the responsibility of supervising four distinct classes of financial institutions, namely, banks, building and loan associations, loan and brokerage companies, and credit unions. 

As to banks, Article 362, R.C.S., 1925, requires that 

the expense of every general and special examination shall be 

paid by the bank examined in such an amount as the commissioner 

shall certify to be just and reasonable, and it further provides 

that assessments therefor shall be made by the commissioner upon 

the banks examined in proportion to the assets or resources held 

by such banks upon the date of the examination, Article 363 requires sums collected as examination fees from banks to be paid 

by the commissioner directly into the State Treasury to the 

credit of the general revenue fund. 
-’ . 

Hon. Lee Brady, page 2. 

As to building and loan associations, Article 881a9, Vernon’s Revised Civil Statutes, requires the banking commissioner to collect from every domestic building and loan 

association fees in lieu of examination fees, based upon gross 

assets, in accordance with a fixed schedule. This article requires the commissioner to assess enough against such association to carry out the provisions of the building and loan association act e This article further provides: 

‘1. . . said fees when collected shall be placed 

in a separate fund with the State Treasurer to be expended during the current year, or so much thereof as 

may be necessary in carrying out the provisions of 

this Act, and should there be an unexpended balance 

at the end of the year, the Banking Commissioner of 

Texas shall reduce the assessment for the succeeding 

year so that the amount produced and paid in the State 

Treasury, together with said unexpended balance in the 

Treasury, will not exceed the amount appropriated for 

the current year, to pay all necessary expenses of supervising the operation and examining the business of 

the corporations doing business under the provisions 

of this Act, which funds shall be paid out upon requisition made out and filed by the Banking Commissioner 

of Texas, when the Comptroller shall issue warrants 

therefor.” 

As to the loan and brokerage companies 

Section 2, Vernon’s Revised Civil Statutes, i 

Article 1524a, 

requ res such class 

of corporations to pay the actual traveling expenses, hotel 

bills, and all other actual expenses incident to such examination, and a fee not exceeding one-eighth of one per cent of its 

actual paid-in capital. 

By the provisions of Article 2465, Vernon’s Revised 

Civil Statutes, credit unions are required to pay the expense 

of each examination made of such credit union, but the statute 

requires that no charge shall be made for services except traveling, hotel and meal expenses and other actual expenses, and 

requires that the credit unions shall be furnished with an itemized statement of such expenses. 

The rider appended to the appro riation~ made to the 

State Banking Department, by Senate Bill E 27$ Acts of the 46th 

Legislature, requires that “all appropriations herein made for 

the State Banking Department shall be paid out of their receipts, 

and the Commissioner shall reduce his expenditures so as not to 

exceed the actual receipts collected.” Said rider further provide s : 
Hon. Lee Brady, page 3 

"For the purpose of enforcing the credit union laws of this State, all fees collected under 

and by virtue of Chapter 11 

4 

Acts of the 41st Legislature, and all unexpende balances are hereby 

appropriated to the Banking Department." 

As to the fees collected from building and loan 

associations, it is to be observed that the Legislature has 

required the creation of a separate fund for the deposit of 

such fees, and it is clear that the Legislature contemplated 

that such fees should be dedicated solely to defraying the 

cost of administering the building and loan association law, 

and, further, that the cost of administering the building 

and loan association laws should be paid exclusively from 

such separate funds. 

46th Legislature, 

The appropriation bill passed by the 

confirms this observation by the use of 

the following language in the rider appended to S.B. 427: 

"Sec. 3. It is further provided that in the 

event the Statutes of the State of Texas provide 

that any amount, fees or funds herein appropriated 

to be paid out of local or special fees or funds 

that the same be so paid out of said local or sa 1 d 

special fees or funds instead of being paid out of 

the General Revenue Fund.N 

It is thus clear that the fees collected from building and loan associations under Article 881a-9, since they are 

available only for the payment of expenditures incurred in supervising building and loan associations, cannot be taken into 

consideration in determining the authority of the banking commissioner to make expenditures in the supervision of one of the 

other classes of corporations. It is likewise clear that expenditures in the supervision of building and loan associations 

are limited to the fees collected from building and loan associations. 

The general law does not set apart and dedicate to the 

payment of expenditures in the supervision of credit unions the 

fees collected from credit unions. However, the legislature has, 

by the rider above quoted, set those fees apart for the purpose 

of enforcing the credit union laws of this State by appropriation. It is therefore clear that such fees may not be taken into 

consideration by the banking commissioner in determining the authority to make expenditures in connection with the supervision 

of another class of corporations. However, neither the general 

law nor the appropriation bill indicates any intention on the 

part of the Legislature to limit the expenditures to be made in 
Hon. Lee Brady, page 4 

the supervision of credit unions to the fees collected from 

such credit unions. On the contrary, this was clearly not intended by the Legislature, for it specifically provided that 

the credit unions should not be assessed any fee for services 

rendered in supervising them. We therefore hold that expenditures in the supervision of credit unions are not limited to 

the fees collected from that class of corporation, but that 

the fees collected from credit unions under the article of the 

statute above cited, may be used to measure only expenditures 

incurred in the supervision of credit unions. 

Fees collected by the Banking Department from banks 

and loan and brokerage companies occupy a different status. 

So also do the receipts of the Banking Department collected 

otherwise than as examination fees or fees in lieu of examination fees from the corporations under the supervision of the 

Banking Department. There is no dedication of the examination 

fees collected from banks and loan and brokerage companies. 

On the contrary, the statute provides or contemplates that they 

shall be deposited in the General Revenue Fund. The examination fees from banks and loan and brokerage companies are not 

impressed with a trust, to be used only for expenses incurred 

in the supervision of such companies. On the contrary, these 

charges merely represent a quid pro quo for services rendered, 

and when the corporation has made the payment required by law, 

it has no interest in the disposition made by the State of the 

monies thus collected. The injustice which you point out in 

your letter, that banks are thereby compelled to contribute to 

the cost of supervision of loan and brokerage companies, or 

vice versa, is more apparent than real. The law only permits 

the commissioner to levy such assessments as will compensate 

the State for the cost of examination. When the bank or loan 

and grokerage company has paid the cost of the examination, 

it has paid for the cost of the service rendered by the State 

in supervising it. The fact that the money thus received by 

the State may be devoted by the State to other State purposes 

does not operate unfairly as to the bank or loan and brokerage 

company, for the cost of supervision of loan and brokerage 

companies has not been taken into consideration by the commissioner in determining the amount of the assessment to be paid 

by the bank, and vice versa. 

\;e hold that the aggregate of the examination fees 

collected by the Commissioner from banks and from loan and 

brokerage companies, and the aggregate of the receipts collected 

by the commissioner from charges other than those from examination fees or fees in lieu of examination fees from all of the 

classes of corporations under the supervision of the Banking COP 

missioner, may be taken into consideration in determining the 
Hon. Lee Brady, page 5 

authority of the commissioner to make expenditures in connection with the supervision of banks, loan and brokerage companies, and credit unions. Thus the cost of supervising banks is 

not limited by the receipts collected from banks, the cost of 

supervising loan and brokerage companies is hot limited to fees 

collected from loan and brokerage companies, and the cost of 

supervising credit unions is not limited to fees collected from 

credit unions. 

Your second and third questions are, for convenience, 

considered together* 

Your appropriation is found under the general heading, 

“State Banking Department”. 

“Salaries” . 

The first division is merely styled 

The second division is styled “Maintenance and Miscellaneous”. .The third division is styled “Building and Loan 

Divi sionn . The fourth division is styled “Loan and Brokerage 

Division” . Under the Loan and Brokerage heading we find items 

r;I;eddL7io,"" 8 Item 6 is for the sum of $200.00 per annum for pr nt ng and*distributing law books; Item 7 of $19,000.- 

Item 8 is $420.00 

“Traveling expense, Banking Department” ; and 

per annum for “Surety Bond Premiums”. 

Referring to the appropriation made by the Legislature 

for the Department of Banking for the fiscal biennium ending August 31, 1939 we find the same general pattern followed. In 

that appropr f ation bill there was the heading under the general 

he ading, ‘I Department of Banking”, of “Salaries”. Then there appeared the heading called “Maintenance and Miscellaneous”. Under the subheading, f*Maintenance and Miscellaneoustl of that appropriation, there appeared Item 15 which was a lump sum appropriation of fees collected from building and loan associations 

as an appropriation for expenses and salaries of the examiners 

and other employees and expenses necessary in supervising building and loan associations. We find also Item 16, a similar lump 

sum appropriation relative to the supervision of the loan and 

brokerage companies; Item 17, an appropriation of all fees collected under the credit union law for the supervision of credit 

unions. Then, under that appropriation we find three items 

similar to those to which we have above referred as appearing in 

the appropriation for the present biennium. These items are 

numbered 18, 19, and 20; Item 18 being in the sum of $300.00 per 

annum for printing and distributing law books; Item 19, the sum 

of $22,500.00 per annum for “Traveling Expenses of Commissioner, 

Employees and all authorized representatives of the Banking 

Departmen 

miums”. 

4"j and Item 20, $450.00 per annum for “Surety Bond Pre- 

,Although the position of an appropriation with respect 

to a particular heading may be of importance in determining the 

intent of the Legislature it is not conclusive. A greater significance must be attache b to the nature of the item. 
X-ion. Lee Brady, page 6 

In the appropriation for the preceding biennium, 

it is clear that Items 18 and 20 were intended for the Banking Department as such, not for a particular division thereof. 

>Je are of the opinion that the intent was the same with respect to Items 6 and 8 under the heading "Loan and Brokerage 

Division", and so hold. 

With respect to Item 7, it appears on the face of 

the item itself that it is for the "traveling expenses" of the 

"Banking Department". The term "Banking Department" obviously 

embraces more than one division of that department, so that, 

in the absence of other considerations affecting construction, 

the item :;,ould be construed as available for expenditure for 

all divisions. L substantially similar item was found in Item 

19 of the appropriation for the preceding biennium. By virtue 

of the fact, however, th-At all expenses of supervising building and loan associations, credit unions, and loan and broker3Ee companies were specifically provided for by separate items 

01 aparoprintion, it was clear that th& item was intended 

only ?or traveling expenses incurred in supervising banks. 

In this biennium we find an item of $5 000.00 separately provided for traveling expenses of the building and loan 

division and we find a separate appropriation for enforcing 

the Credit Union laws. Since an approi2riation not only provides money for a particular purpose, but limits the expenditure for that purpose, it is clear that Item 7 is not intended 

to be a-J;iilable for travelling expenses incurred in supervising building and loan associations and credit unions. It is, 

however, available for all other traveling expenses of the 

"Banking Department" in toto, which include, of course, traveling expenses in supervising banks and loan and brokerage 

companies. 

APPROVED AUG 27, 1940 Yours very truly 

/s/ Grover Sellers 

First &ssistant Attorney General /ATTORNEY GENERAL OF TEXAS 

APPRO?ED: OPIMION COKMITTEE By /s/ R. W. Fairchild 

BY: BWB, CIlAIRKAi'~ Richard W. Fairchild, 

Assistant 

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