Court Opinion

ID: 4132868
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:31:20.554598+00
Date Added: 2024-06-11T14:33:55.874165
License: Public Domain

January     30,   1975

The Honorable Dolph Briscoe                                 Opinion No.   H-   510
Governor of Texas
State Capitol Building                                      Re:    Disqualification for
Austin, Texas 78711                                                service as a member
                                                                   of the State Banking
Dear Governor          Briscoe:                                    Board

   You have asked our opinion concerning, disqualifications’                   for appoint:
ment of the citizen member of the State Banking Board.

     The State Banking Board was created in the Texas Banking Code of
1943 and consists     oft the State Treasurer,   the Banking Commissioner
and a citizen member.         In 1971 the Banking Code was amended and the
citizen member     of the Board pras described as “a citizen of this State,
who shall represent     the interests   of the general public, . . . ” Acts 1971,
62nd Leg.,    ch. 950. p. 2884, V. T. C. S. art. 342-115.     $1. At the same
time, the Legislature      provided that:

                 (c) No member    of the Board shall be an officer,
            director or otherwise interested    in the management
            or operation of any State or national bank or savings
            and loan association:   provided further,  that if any
            Board member     shall own or otherwise control any
            shares of stock in any State or national bank, or
            savings and loan association,    that he shall file with
            the chairman a list of all such stocks,     describing
            the security,  the quantity, and the value thereof,    which
            list shall.be a public record of the Banking Board.

V.T.C.S.,       art.    342-115,   5 3(c).

    Specifically       you ask:

                . . . would a shareholder   of a bank, who owns
            18 per cent of the bank’s stock, and who is an attorney
            who represents   the bank as its attorney, be a person

                                        p.   2296
The Honorable    Dolph Briscoe.    page 2        (H-510)

        who is interested in the management   or operation
        of a bank in such a manner as to disqualify    him
        under Article 342-115   from being the citizen
        member on the State Banking Board.

    We know of no statutory definition of the term “otherwise     interested  in
the management     or operation of any State or national bank or savings and
loan association.”     Clearly, it encompasses   persons other than officers
and directors   since it is axiomatic that every part of a statute should be
given effect.   See Gerst v. Oak Cliff Savings and Loan Association,      432
S. W. 2d 702 (g.     Sup. 1968); Independent Life Ins. Co. of America      V.
Work,   77 S. W. 2d 1036 (Tex. Sup. 1934).

     The statutory requirement that State Banking :Board members           file a
list of bank stocks they own, implies that there is no absolute bar to bank
stock ownership by Board members;        however,    the caption to the 1971
amendment to the Banking Code indicates that one of the purposes of the
statute was “to prohibit ownership of certain stock and disclosure          thereof. I’
The only language in the 1971 amendment which could be construed to
include the prohibition of the “ownership     of certain stock” is the require-
ment that “no member     of the Board shall be an officer,       director or other-
wise interested in the management      or operation of any . . . bank.        . . . ”
Since the caption of the bill discusses   its prohibitions   in terms of stock
ownership,    we believe those persons who own a substantial amount of stock
would be among those ‘lotherwise interested        in the management      or operation
of a bank. ”

     There is no clear indication of the quantity of stock which would cause
disqualification,    but since bank directors  are prohibited from serving on
the Board, we believe a person who has a financial interest in the operation
or management       of the bank which is similar to the interest of the director
would be prohibited from serving.        At the very minimum a person who
owns enough stock to insure his election to the bank’s board of directors
would have a financial interest in the operation or management        of the bank
similar to the interest of a director.      Whether a person who owned eighteen
per cent of the stock in a bank would fall in that class would depend on the
by-laws    of the bank.     Persons owning a lesser amount of stock also might
be “otherwise     interested in the management    or operation of [a] bank,”
but whether that interest is present will depend on the facts of the case.

                                     p.   2297
The Honorable       Dolph Briscoe,   page 3      (H-510)

    We do not suggest that these are the only persons who, might be covered
by the statutory prohibition.     A bank’s attorney might well fit in this cate-
gory if his representation    resulted in his being substantially     involved in
the operation or management       of the bank.  Furthermore      his being compen-
sated to represent a bank might be inconsistent      with his statutory duty to
“represent    the interests  of the general public. ” In determining      the extent
of involvement    required to constitute a person’s    being “otherwise      interested
in the management      or operation of any . . . bank.     . . .‘I or being unable
to fulfill the statutory duty to represent the interests     of the general public,
we are required to be guided by the legislative      declaration    of State policy
in article 6252-9b.     That article provides in part:

             Section I.    It is the policy of the State of Texas
        that no state officer or &ate -employee shall ,have
        any interest,    financial or otherwise,    direct or
        indirect,   or engage in any business transaction      or
        professional    activity or incur any obligation of any
        nature which is in substantial conflict with the
        proper discharge of his duties in the public interest.

        .   .   .

        Section     2.

                (5) . . .

             (C) In defining the term ‘major state agency, ’
        [which includes the State Banking Board] it is the
        intent of the legislature    to limit the application of
        the financial disclosure     requirements     of this Act
        with respect to appointed state officers to those
        appointees who exercise       substantial power and
        discretion   in the implementation      of state programs
        and in the expenditure of significant amounts of
        public funds.     The legislature    hereby finds that the
        exercise   of discretion    by these appointed state
        officers in the granting or withholding of licenses         or
        permits,   issuance    of regulations,    rulings,   or orders,

                                     p.   2298
The Honorable    Dolph Briscoe,     page 4      (H-510)

        construction    and location of facilities,  and in other
        matters   relating to regulation,    adjudication,    licensing,
        or expenditure of public funds, has a major impact
        on every citizen of this state.     Therefore,     the legis-
        lature finds that the potential for abuse of the public
        trust by these appointed state officers is significantly
        greater than in the case of appointed officers of other
        state agencies.

    --See also Code of Professional   Responsibility,         DR 9-101,   EC 9-3~(V. T. C.S.,
title 14, App.,  art. 12. 6 8); Texas Penal Code,           § 36.08 (a)and (e). ~.

    These determinations’necessarily    involve the resolution of.questions of
fact which are not before us; however,   we believe the Governor and the
Senate should be able to utilize these guidelines to determine whether any
particular person qualifies under the language of the statute.

                              SUMMARY

             A person who owns an amount of stock sufficient
        to insure his election to the board of directors        of a
        bank is not eligible to serve as a member of the State
        Banking Board.       Persons    owning lesser    amounts of
        stock may also be disqualified.        Whether an attorney’s
        representation     of a bank substantially    involves him in
        the management        or operation of a bank or prevents
        his representing     the interest of the general public so
        as to disqualify him from membership           on the State
        Banking Board involves a resolution        of questions of
        fact.  Any determination        should be made in the light
        of the legislative    declaration  of state policy in
        article 6252-9b,     V. T. C. S.

                                             Very   truly yours,

                                              OHN L.      HILL
                                                          General   of Texas

                                     p.~ 2299
The Honorable   Dolph Briscoe,     page ,5 G-w-

APPROVED:

DAVID   M.   KENDALL,   First    Assistant

C. ROBERT HEATH,        Chairman
Opinion Coqmittee

                                   p.   2300