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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 andBrokerage 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 mayit be used to pay the expense of travel in supervision of banks?

3. Is Item 8 (of the sameappropriation) following Item 7above mentioned, limited to the payment of premiums onbonds of employees charged with supervision of loan andbrokerage companies?

Asyou state, the Banking Department is charged with the responsibility of supervising four distinct classes of financial institutions, namely, banks, building andloan associations, loan andbrokerage companies, and credit unions.

Asto 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 anamount as the commissioner shall certify to bejust andreasonable, and it further provides that assessments therefor shall be madebythe 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 sumscollected as examination fees from banks to be paid by the commissioner directly into the State Treasury to the credit of the general revenue fund.-’

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Hon. Lee Brady, page 2.

Asto building and loan associations, Article 881a9, Vernon’s Revised Civil Statutes, requires the banking commissioner to collect from every domestic building andloan association fees in lieu of examination fees, based upon gross assets, in accordance with afixed schedule. This article requires the commissioner to assess enough against such association to carry out the provisions of the building andloan association acte 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 muchthereof as maybe necessary in carrying out the provisions of this Act, and should there be anunexpended balance at the end of the year, the Banking Commissioner of Texas shall reduce the assessment for the succeeding year sothat 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 madeout and filed bythe Banking Commissioner of Texas, when the Comptroller shall issue warrants therefor.”

Asto the loan andbrokerage 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 afee not exceeding one-eighth of one per cent of its actual paid-in capital.

Bythe provisions of Article 2465, Vernon’s Revised Civil Statutes, credit unions are required to pay the expense of each examination madeof such credit union, but the statute requires that no charge shall be madefor 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.

Therider appended to the appro riation~ madeto the State Banking Department, by Senate Bill E 27$ Acts of the 46th Legislature, requires that “all appropriations herein madefor 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 provides:Hon. Lee Brady, page 3

"For the purpose of enforcing the credit union laws of this State, all fees collected under andby virtue of Chapter 114 Acts of the 41st Legislature, and all unexpende balances are hereby appropriated to the Banking Department."

Asto 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 andloan association law, and, further, that the cost of administering the building andloan 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 samebe so paid out of said local or sa d 1 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 andloan associations under Article 881a-9, since they are available only for the payment of expenditures incurred in supervising building andloan associations, cannot be taken into consideration in determining the authority of the banking commissioner to makeexpenditures in the supervision of one of the other classes of corporations. It is likewise clear that expenditures in the supervision of building andloan associations

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

Thegeneral law does not set apart anddedicate 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 maynot be taken into consideration by the banking commissioner in determining the authority to makeexpenditures in connection with the supervision of another class of corporations. However, neither the general law nor the appropriation bill indicates any intention onthe part of the Legislature to limit the expenditures to be madeinHon. Lee Brady, page 4

the supervision of credit unions to the fees collected from such credit unions. Onthe 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. Wetherefore 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, maybe used to measure only expenditures incurred in the supervision of credit unions.

Fees collected by the Banking Department from banks andloan andbrokerage companies occupy adifferent status. Soalso dothe 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 nodedication of the examination fees collected from banks and loan andbrokerage companies. Onthe contrary, the statute provides or contemplates that they shall be deposited in the General Revenue Fund. Theexamination fees from banks andloan andbrokerage companies are not impressed with atrust, to be used only for expenses incurred in the supervision of such companies. Onthe contrary, these charges merely represent aquid pro quo for services rendered, andwhen the corporation has madethe payment required by law, it has no interest in the disposition madeby 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. Thelaw only permits the commissioner to levy such assessments as will compensate the State for the cost of examination. Whenthe bank or loan andgrokerage company has paid the cost of the examination, it has paid for the cost of the service rendered by the State in supervising it. Thefact that the moneythus received by the State maybe devoted bythe State to other State purposes does not operate unfairly as to the bank or loan andbrokerage company, for the cost of supervision of loan and brokerage companies has not been taken into consideration bythe commissioner in determining the amount of the assessment to be paid by the bank, andvice versa.

\;ehold that the aggregate of the examination fees collected by the Commissioner from banks and from loan and brokerage companies, andthe 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, maybe taken into consideration in determining theHon. Lee Brady, page 5

authority of the commissioner to makeexpenditures in connection with the supervision of banks, loan andbrokerage companies, and credit unions. Thus the cost of supervising banks is not limited by the receipts collected from banks, the cost of supervising loan andbrokerage companies is hot limited to fees collected from loan andbrokerage companies, andthe cost of supervising credit unions is not limited to fees collected from credit unions.

Your second andthird questions are, for convenience, considered together*

Your appropriation is found under the general heading,

“State Banking Department”

. “Salaries”

. Thefirst division is merely styled

The second division is styled “Maintenance andMiscellaneous”

. .The third division is styled “Building andLoan Divisionn

. Thefourth division is styled “Loan andBrokerage Division”

. Under the Loan andBrokerage heading wefind items 

### r;I;eddL7io,"" 8 Item 

### 6is for the sumof $200.00 per annumfor pr nt ng and*distributing law books; Item 

### 7of $19,000.-

Item 

### 8is $420.00“Traveling expense, Banking Department” ; and per annumfor “Surety BondPremiums”

. Referring to the appropriation madeby the Legislature for the Department of Banking for the fiscal biennium ending August 31, 1939 wefind the samegeneral pattern followed. In that approprfation bill there was the heading under the general heading, ‘IDepartment of Banking”

, of “Salaries”

. Then there appeared the heading called “Maintenance andMiscellaneous”

. Under the subheading, f*Maintenance andMiscellaneoustl of that appropriation, there appeared Item 15 which was alump sumappropriation of fees collected from building andloan associations
as anappropriation for expenses and salaries of the examiners and other employees andexpenses necessary in supervising building andloan associations. Wefind also Item 

### 16,asimilar lump

sumappropriation relative to the supervision of the loan and brokerage companies; Item 17, anappropriation of all fees collected under the credit union law for the supervision of credit unions. Then, under that appropriation wefind three items similar to those to which wehave above referred as appearing in the appropriation for the present biennium. These items are numbered 18, 

### 19,and 20; Item 18being in the sumof $300.00 per annumfor printing and distributing law books; Item 19, the sum
of 

### $22,500.00per annumfor “Traveling Expenses of Commissioner, Employees and all authorized representatives of the Banking Departmen miums”

. 4"j and Item 20, $450.00 per annumfor “Surety BondPre-

,Although the position of an appropriation with respect to aparticular heading maybe of importance in determining the intent of the Legislature it is not conclusive. Agreater significance must be attache bto the nature of the item.X-ion.Lee Brady, page 

### 6

In the appropriation for the preceding biennium, it is clear that Items 

### 18and20were intended for the Banking Department as such, not for aparticular division thereof. >Jeare of the opinion that the intent was the samewith respect to Items 

### 6and 8under the heading "Loan andBrokerage 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". Theterm "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. Lsubstantially similar item was found in Item 

### 19of the appropriation for the preceding biennium. Byvirtue of the fact, however, th-At all expenses of supervising building andloan associations, credit unions, andloan 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 wefind anitem of $5000.00 separately provided for traveling expenses of the building and loan division andwefind a separate appropriation for enforcing the Credit Union laws. Since an approi2riation not only provides moneyfor aparticular purpose, but limits the expenditure for that purpose, it is clear that Item 

### 7is not intended to be a-J;iilable for travelling expenses incurred in supervising building andloan 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 andbrokerage companies.

APPROVED

AUG

### 27,1940 Yours very truly /s/ Grover Sellers First &ssistant Attorney General /ATTORNEY GENERAL

OFTEXAS

APPRO?ED:OPIMIONCOKMITTEE By/s/ R. W.Fairchild BY: BWB,CIlAIRKAi'~ Richard W. Fairchild, Assistant RWF:jm:wb