Court Opinion

ID: 4132209
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:24:13.076835+00
Date Added: 2024-06-11T14:35:03.580560
License: Public Domain

The Attorney                 General of Texas
                                               June   2, 1978
JOHN   L. HILL
Attorney General

                   Honorable L. Alvis Vandygriff                         Opinion No. H- 1171
                   Texas Savings & Loan Department
                   P. 0. Box 1089                                        Re: Whether     the management
                   Austin, Texas 78767                                   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 obli-
                               gated 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.

                                                        P.   4733
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.

                                       p.   4734
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

                                        P.   4735