The Attorney General of Texas 

June 2, 1978 

JOHN L. HILL 

Attorney General 

Honorable L. Alvis Vandygriff 

Texas Savings & Loan Department 

P. 0. Box 1089 

Austin, Texas 78767 

Opinion No. H- 1171 

Re: Whether the management 

of the Savings & Loan 

Association may vote proxies of 

savings members and borrowing 

members in favor of a proposed 

merger. 

Dear Mr. Vandygriff: 

You have requested our opinion regarding the voting of general proxies 

by the management of a savings and loan association in favor of a proposed 

merger. You state that the management of a particular savings and loan 

association, composed of savers, borrowers and owners of permanent reserve 

fund stock, has agreed to merge with another savings and loan association. 

You first ask whether savers and borrowers are entitled to vote on the merger 

question. 

Section 10.03 of the Savings & Loan Act, article 852a, V.T.C.S., requires 

that a merger 

be approved by a majority of the total vote the 

members are entitled to cast. 

(Emphasis added). “Member” is defined in the statute as any 

person holding a savings account in an association, or 

owning one or more shares of its Permanent Reserve 

Fund Stock, or borrowing from or assuming or obligated upon a loan in which an association has an 

interest, or owning property which secures a loan in 

which an association has an interest. The voting rights 

of members shall be as provided in the bylaws of each 

respective association. 

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Honorable L. Alvis Vandygriff - Page 2 (H-1171) 

Section 1.03(10). In the absence of any bylaw provision to the contrary, each 

“member” is entitled to cast one vote by virtue of his membership 

plus an additional vote for each share or fraction thereof of 

the Permanent Reserve Fund Stock of the association, if 

any, owned by such member, and an additional vote for each 

One Hundred Dollars ($100) or fraction thereof of the 

withdrawal value of savings accounts, if any, held by such 

member. 

Section 3.06. Thus, in the situation you pose, each saver and borrower of the 

association is a “member” entitled to one vote plus additional votes as provided in 

section 3.06. 

You next ask whether the management of a savings and loan association may 

vote the existing proxies of a member on a merger question. In the usual instance, 

an association requires that all savers and borrowers execute a general proxy, 

which “continueIs in force from year to year,” unless revoked, pursuant to section 

3.06. A general proxy, however, 

only authorizes the holder to vote on the ordinary affairs of 

the corporation, such as the election of directors, etc., and 

does not authorize such holder to vote on the extraordinary 

matter of consolidating one company with another. 

Fidelity Building & Loan Ass’n v. Thompson, 25 S.W.2d 247, 251 (Tex. Civ. App. - 

Dallas 1930). This case was reversed on other grounds: however, this relevant 

portion of the Civil Appeals opinion was specifically~ approved~ and adopted. 

Fidelity Building & Loan Ass’n v. Thompson, 45 S.W.2d 167 (Tex. Comm’n App. 1932, 

jdgmt adopted). See Fletcher, Corporations 9 2060 (1974 ed). We believe it is clear 

- 

that the management of a savings and loan association may not vote a member’s 

general proxy to effect a merger with another association. Any attempt to do so 

would be void. Fidelity Building & Loan Ass’n, m, at 251. 

Your final question is whether the Savings & Loan Commissioner may require 

special proxies to vote on a proposed merger. The Commissioner is empowered to 

supervise and regulate savings and loan associations under his jurisdiction in a 

manner which is consistent with the Savings & Loan Act. Article 342-205(d), 

V.T.C.S. The Commissioner is also authorized to see that such associations follow 

the law as provided in section 8.13. Since Fidelity Building & Loan Ass’n v. 

Thompson holds that general proxies may not be voted on a merger question, we 

believe it follows that the Commissioner may require that the management obtain 

from saver and borrower members special proxies authorizing the management to 

vote upon a proposed merger. 

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Honorable L. Alvis Vandygriff - Page 3 (H-1171) 

SUMMARY 

In the absence of a bylaw provision to the contrary, every 

saver and borrower of a savings and loan association is a 

“member” entitled to vote. The management of a savings 

and loan association may not vote a member’s general proxy 

to effect a merger with another association. The Savings & 

Loan Commissioner is authorized to require special proxies 

to vote on a proposed merger. 

APPROVED: 

C. ROBERT HEATH, Chairman 

Opinion Committee 

jsn 

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