ORNEY GENEKAL
OFTEXAS
Honorable,JohnQ. McAdsms Commissioner, Departmentof Banking Austin,Texas
Dear Mr. McAdams: OpinionNo. O-4912 Re: Whethsr or not a corporation may be organizedunder Title 16 of the RevisedCivil Statutes of Texas having trust and dis- count powers only,without the reauiremsntof full paymentof it6 capitalin cash. We beg to acknowledgereceiptof your letterasking an opinionfrom this departmentupon the above-capitioned subjectmatter,the letterbeing as follows: "*I*, "In view of the above please advisethis(Dspartmant aa to whether or not a corporationto be organizedunder theilprovisionsof Title 16 of the RevisedStatutesof Texas, 1925,havingbnly trust and discountpowers, without the Dower to receivedeposits,can be incorporatedwithout the full paymentof its capitalin cash."
Article 376 of the RevisedCivil Statutesprovides: "Five or more .persons,a majorityof whom shall be residentsof this 'State,who have associatedthemselvesby written articlesof agreement ss~*.prdVid&%y*iiSgeneralcorporationlaw, may be incorporatedfor the purposeof establishing: (a) a bank of depositor discount,or both of depositand discount;(b) a bankingand trust company;or (c) a savingsbank. + * *"
It will be seen that the statuteauthorizesa bank of depositor discount,and likewisea bankingand trust company.
The power to accept depositsis not the sole exclusivebankingfunction; the power to discountpaper is itselfa bankingfunction. See; Zollman on Banks and Banking,2% 4061-2. This is not only true generally,-but especiallyso in the lip&t of the (a) clause in the foregoingstatute.
Section 16 of ArticleXVI recentlyamended is as follows: "The Legislatureshall by generallaws, authorizethe incorporation of HonorableJohn Q. McAdams - page 2 , O-4912
corporatebodieswith bankingand discountingprivileges,and shall providefor a system of State supervision,regulationand control of such bodieswhich will adequatelyprotectand secure the depositors and creditorsthereof.
"No such corporatebody shall be chartereduntil all of the authorized capitalstock has been subscribedand paid for in full in cash. Such body corporateshall not be authorizedto engage in businessat more than one place which shall be designatedin its charter.
"No foreigncorporation,other than the nationalbanks of the United States, shall be permittedto exercisebanking or discountingprivilegesin this State.'l
We shall now determinewhether or not the case of Kaliskiv. Cossett, BankingCommissioner,109 S.W. (2) 340, writ of error refused,cited by you, has any effect upon the questionpropounded. That case involved the constitutionaldouble liability imposedupon shareholdersin cor- poratebodies "withbankingand discountingprivileges",as appliedto the Peoples,'FinanceCompanyof San Antonio, incorporatedunder and by virtue of the provisionsofSubdivision29 of Article ll21Revised Civil Statutes, 1911, laterSubdivision48 of Article 1302 RevisedCivil Statutes,1925. The court held that such corporationwas not the corporatebody whose shareholderswere liableto the superaddedliabilityof the Constitution, because the Peoples'Industrial~Bank was not authorizedto "exercise bankingand discountingprivileges." In the course of the opinionthe court did say:
"We are urged to change the word 'and' to 'or',and read this phrase ' but we see no justification "bankingor dlscounting::.privileges, for such a construction, for unquestionablythe word 'banking'includesdiscounting. The words 'and discounting'might be treated as surplusege,and the sectionread to mean that shareholdersin bankingcorporationshouldnot be issueduntil all of its stock had been paid for'in cash."
This language,we think is a dictum,for it is not the basis to any degree whatever,of the court'sdecision,that decisionbeing as ebove stated.
However that may be, it is quite significantthat the writers of the Constitutionin the last paragraphof Section 16 expresslydeclared,"No Foreign corporation,other