Court Opinion

ID: 4136352
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:12:37.279438+00
Date Added: 2024-06-11T14:35:07.216038
License: Public Domain

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                                                  EP     GENERAL

      Honorable Zollie Stsakley                 %hion    No. WW427
      becrut4ry 6f state
      Aw tin, Texas                             R e : Oo r ufle~tlo
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                                                     lwKo d b ulkto 4 etM ta o ta -
                                                     mea twr tr
                                                              y uk r iuth o8th
          Dear Sk:                                   o fTo me.

                 This ‘Opinion is Lsswd in reapours to your latbr wlua%ln some
      qUestion Is ralsed as to who&or or not a aatloaal b*        located in a foreign
      rotate caa~quallfy aa a trltamontary   trustor in the 8tata of Trxas.   This
      oplnlo11wll1 be addisssad prlaeipally    to ~JIOqwrtiar  6f athrthr   or not a
      national bank domiciled ,tn saothoti atab may act U terbmeatary         trustee
      of certda trwt~property located tn Texas. We do sot pus Upon tha qlres-
      tbn of whether or not a national bank may come late the State ob’Texaa
      to eatabllsh an sfflccl or’braach, or do a trust bw,lwsr.      WhM eorUtltxtas
      doing bUstws6     la Texas, IO aa to r-squire a cett&rea# of lsthority    by a
      forsip   corporatton, is governed by the TSXM Bvrlaorr        Corporation Act.
      Artlcla 8.01, B(11) of that Act states:

                             “B. Without excluding othar actlvltlos wblch may
                     not con~tltute transactlag b&nerr    in thb ICbto, u ford
                     corpor&t’loa shalt not be considered to bo tru6rc -frd%
                     wss la thu

                     lowfag actlvltia~:
                             Y
                              . . .
                              “(11) Exerclrhg    the power8 of lwrrcatmr   or *dmla-
                     lstrator of tha ertato of a noareridrat   decndoat uadvr a-
                     clllary letters ‘Lsswd by a tourt of tbhlr St&w, or l    xWCI#lmg
                     the powers of a trusta ua&r the will of a asmrtdont           de-
                     cedent or under an inter vlvor trust created by e noarorl-
                     dent of thlr Stata, lf the axercKss of such wwk.         h d@mr
                     cage, ‘kill not invo~vo actlvitbr  Welch m&d k ~Wd             to
                     coIuMtmts tlw traMsct1ag of lua~lawsr ln tbu 5tue ix tbr
                     cam0 cd a forelgth corpo*rtlon Mtinu    1s lt8 011 Sl**t,’
                     @mphasU      add e d . I

          It 1s omr rladerrtaadlng that the actlvltler ahlch tbo fbrrlp  nrtloarl bank
          dusiru to perform In thls State are’ not such as would eoa#tltxta traas-
          actlng bushess,    lf the corporatloa wara actlng In Its own right.
Hon. Zollie   Steakley,   page 2 (WW-627)

            National banks were created under the Natlonal BankIng Act which
 is set forth in Chapter 2, Sections 21 to 213, Title 12 U.S.C.A.   Section 24
 prescribed    the powers of national banks but did not include any authority
 to act ln a fiduciary capacity.   The Federlvl Reserve Act, as amended
 in 1918, Section 11(k), now Section 248(k). Title 12 U.S.C.A., conferred
 upon the Board of Governors of the Federal Reserve System the power
-and authority to grant by special permit to national banks, the authority
 to act in fiduciary capacities when not In contravention .of state law.
 Pertinent parts of that Act read as follows:

                 ‘The Board of Governors of the Federal       Reserve
          System shall be authorized and empowered:

                   “(k) To grant by special permit to national banks
          applying therefor, when not ln contravention of State or
          local law, the rlght to act as trustee. executor, adminis--
          trator, registrar   of stocks and bonds, goardlan of es’tates,
          assignee, receiver,    committee of estates of lunatics, or
          in any other fid.uciary capacity in which State banks,
          trust c,ompanies, or other corporations which come into
          competition with national banks are permitted to act un-
          der the laws of the State in which the national bank is
          located,

                  *Whenever the laws of such State authorize or
          permit the exercise of any or all of the foregoing powers
          by State bapks, trust companies, or other corporations
          which compete with national banks, the granthg to and
          the exercise bf such powers by national banks shall not
          be deemed to be in,contravention of State or local law
          within the meaning of this chapter.”

          Thus, the Federal statutes empower the Federal Reserve Board
to grant, by a special permit, to natfonal banks applying therefor, when
not in contravention of State or local law, the right to act as trustee,
administrator,   executor, guardian, etc., or In any other fiduciary capacity
in which State banks, trust’companies,    or other corpolations   would come
lnto competition with national banks under the laws of the State In which
the national bank is located.

          The onIy.question 1s whether. or,‘not the laws of the State of Texas
prohibit a foreign corpbration’coming   lhto this State to act’in a fiduciary
or trust capacity.  There seem to be only hno stabites In the State of
Texas which relate to this question. The ftrst 1s Article 342-902 which
provldes:
Hon. Zullle   Steal&y,   page 3 (WW-627)

                   ‘It &a11 be unIawfu1 fti w    person; caipora-
          tton, firm. partnership, asaoclatlon   or common law
          hut:

                  *(l) To eoaduct a banktug or trust bushes8
          or to hold oat to the pnbIic that it ln conducting a banh-
          lug or trast baa&mm;. . .

                  *Provided.   however, that this Article hall
          not apply to (1) nattonal banksI (2) state banks8 (3)
          otharcorporatloas heretofore or hereafter organ-
          iaed nnder the laws of thts stats or of the United
          States to the extent that such corporations    are au-
          thorked undar thair charter or the laws of this
          state or of the Unfted States to conduct such bnsl-
          new or to use such terms. . .u

‘Since the Leglslatnre   has been fit to exempt curporatlons organl%ed undar
 the laws of the United States (12 U.S.C., Sac. 21)--to the extent that such
 corporations are anthorlasd under the laws of the United States to act as
 testamentary trustees on trust property located la Texas (12 U.S.C.. See;
 248(k) )--from   the prohlbftlon of Article 342-902. there appears to be no
 Texas statute prohlbltlng a national bank, not domlclled ln Texas from
 acting la the abovs mentioned capacity ie the Stats of Texas.

          The only other s tatate which relates to the questlon of forefgn
corporathus    coming to Texas to angaga la the tiwst,bustness  as dis-
tlngulahed ,from trust functions 1s Article 1513a. This artlcIe prevldem:

                   “See. 2. Traat companies may be created,,
          and any corporation,   however created, may amend
          itr charter h compliance herewith, or a fore1
          corporation may obtaln a cartlflcate   of author f”ty to
          do bumhum Ln Texas for the followlng pnrpose:

                   “To act as trustee, executer, admbilstrator,
                  rdlan when designated by any person, corpo-
               on; or court to do so, and aa agent for the per-
          rat F”
          Or
          formance of any lawful act, 1ncIadiag the right to
          receive depostta made by agencter of the United States
          of Amerfca for the authorfwd account of any 1adlvldualI
          to ret a* attorney-in-fact  for reciprocal  or lnter-lnsrr-
          ance uxchaage.*
Hon. Zollie   Steakley,   page 4 (WW-627)

            We do not feel that this particular statute is applicable to the
question raised, because the national bank involved here ts not desirous
of a certificate  of authority to do a trust business in Texas, but wants
to act only as a testamentary trustee of a foreign trust with regard to
certain trust property Located in Texas.

           Thus, current authority prevails that a national bank may go
outside its domicile to act in a trust capacity if the state to which it
desires to go does not expressly,    or by necessary implication, prohibit
its entry. The prohibitive statute    (Article 342-902, V.C.S.)has   expressly
excluded ucorporations organized under the laws of the Unites States”,
of which a foreign national bank is one, thus indicating the necessary
tolerance, when read in conjunction with Article 8.01B (11). to authorize
their entry to perform certain trust functions.      We do not pass on the
question of a fore@    corporation performing     trust functions which would
constitute transacting business under the emphasised portion of Article,
8.01B(ll).

                                  SUMMARY

                   National banks domiciled in a foreign
                   state may come into Texas to perform
                   fiduciary functions If a state bank in
                   the state of the national bank’s domi-
                   cile may act outside its borders in a
                   fiduciary capacity.

                   Texas law does not prohibit a foreign
                   national bank from coming into the
                   State to act as a testamentary trustee.

                                      Very truly yours,

                                      WILL WILSON
                                      Attorney General      of Texas

                                      BY
                                            C. Dean Davis
                                            Ass is tant

CDD:j’g
Hon. Zoliie   Steakley,    page 5 (WW-627)

APPROVED:

OPINION   COMMITTEE:

Geo. P. Blackburn.        ChaIrman

C. K. Richards
Robert T. Lewis
Leonard Passmore

R.EVIEWED FOR THE ATTORNEY              GENERAL
BY:
     W. V. Geppert