Court Opinion

ID: 4131454
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:15:55.274381+00
Date Added: 2024-06-11T14:33:27.555928
License: Public Domain

The Attorney                  General of Texas
                                                                  March 15,    1983
    JIM MATTOX
    Attorney General

                                          Mr. Kenneth H. Ashworth                                  Opinion   No. JM-13
    Supreme      Court Building           Commissioner
    P. 0. BOX 12546
                                          Coordinating    Board                                    Re:      Whether       securities
    Austin.    TX. 78711. 2548
    51214752501
                                          Texas College    and University    System                pledged   by bank to eecure
    Telex    9101874-1367                 P. 0. Box 12788, Capitol      Station                    deposit   of    junior     college
    Telecopier      5121475.0266          Austin,   Texas    78711                                 district   funds may be placed
                                                                                                   for safekeeping     with another
                                                                                                   bank
    1607 Main St., Suite 1400
    Dallas, TX. 75201-4709
    2141742.8944                          Dear Commissioner      Ashworth:

                                                You ask two questions     regarding           the safekeeping          of securities
    4624 Alberta     Ave.. Suite    160
                                          pledged  by depository   banks to secure             junior   college       district   funds
    El Paso. TX.     79905-2793
    91515334484
                                          held by those depository   banks.    First,          you ask:

r                                                      May a bank,      chosen   as a depository        by a public
     .~20 Dallas Ave.. Suite       202                 junior   college    and pledging     securities       to cover
    Houston.     TX. 77002.6966
                                                       the funds on deposit      by the college,      legally   place
    713/650-0666
                                                       those securities      in safekeeping    with another      bank
                                                       that   is owned by the same holding             company that
    806 Broadway.      Suite 312                       owns a depository      bank?
    Lubbock.  TX.     79401-3479
    6061747-5236
                                                Section    130.084   of   the Texas    Education     Code provides:

    4309 N. Tenth,     Suite E                         The board of trustees     of junior      college   districts
    McAllen,     TX. 76501-1665                        shall be governed    in the establishment,        management
    512/682.4547                                       and control    of the junior     college     by the general
                                                       law governing     the establishment,         management and
    200 Main Plaza, Suite 400
                                                       control  of independent    school    districts    insofar    as
    San Antonio.  TX. 76205-2797                       the general   law is applicable.
    5121225.4191
                                          The provisions       of  the Education         Code relating      to junior       college
                                          districts,    section     130.001,     et    seq.,    do not   contain    a provision
                                          relating   to junior    college    district     depositories.     Thus, according         to
                                          the express    language of section         130.084,    junior college   districts       are
                                          governed   by the School Depository           Act,   section  23.71 et seq. of the
                                          Education   Code.

                                                Section   23.79(c)    of the Education    Code permits a depository       bank
                                          to deposit    or pledge approved securities       "with the school   district,    or
                                          with a trustee    designated    by the school   district."    No other provision
                                          in the School      Depository    Act makes reference       to a trustee     holding
                                          approved securities      for a depository    bank.

                                                                                  p.   53
Mr. Kenneth    H. Ashworth       - Page 2        (JM-13)

       “Designate”    is not defined    in the Education     Code.     Words that are
not defined     in a statute     are given their    ordinary   significance    unless
they are words of art or words connected               with a particular      subject
matter.     V.T.C.S.    art.   10, §l; National    Life Company v. Stegall,        169
S.W.2d 155, 157 (Tex.          1943).   mDesignate”     means to indicate      or set
apart    for a purpose       or duty.    Black’s   Law Dictionary       402 (5th ed.
1979); Webster’s     New Collegiate     Dictionary    308 (1977).      Thus, a school
district    may specify     the trustee  bank.

       The power      to    designate     includes    the    power   to    approve    or
disapprove     a trustee    bank.    Neither   the School Depository       Act nor any
other statute     of which we are aware prohibits           a depository      bank from
placing     for safekeeping      pledged   securities    in another     bank owned by
the sane holding        company that owns the depository           bank.      Thus, the
answer     to your    first    question     is yes,   g    the bank in which         the
securities     are to be placed        is designated    by the school      district   as
the “trustee”     bank.     You also ask:

             If the answer to question       (1) is yes, does section
             23.79(c),      Texas Education   Code, give the college
             the authority       to direct   the depository   bank to
             place     pledged   securities   in safekeeping   with   a
             bank independent      of the holding  company?

       We believe     our discussion        of your first       question      answers your
second question.       Section    23.79(c)     of the Texas Education         Code clearly
provides     that the school       district      has the authority          to select     the
trustee    or bank in which the pledged             securities     shall   be kept.     This
interpretation      is consistent     with the remaining          provisions     of section
23.79(c),     which give    the school       district     authority      to designate     the
amount of approved         securities       and to approve         the substitution        of
approved‘securities      by the depository         bank.

                                        SUMMARY

                 With     the    approval      of      the     junior      college
             district,     a depository      bank holding         public     junior
             college      funds    may place          for     safekeeping        its
             pledged    securities    with another bank that is owned
             by the same holding            company as the depository
             bank.      Section    23.79(c)       of     the Education          Code
             authorizes     a junior    college      district     to direct      the
             depository     bank to place the pledged              securities      in
             safekeeping      with a bank independent            of the holding
             company.

                                                       JIM      MATTOX
                                                       Attorney  General       of   Texas

                                                 p.   54
Mr. Kenneth   H. Ashworth    - Page 3       (JM-13)

TOM GREEN
First Assistant   Attorney   General

DAVID R. RICHARDS
Executive Assistant    Attorney   General

Prepared    by Yolanda McKeeman
Assistant    Attorney  General

APPROVED:
OPINION COMMITTEE

Susan L. Garrison,    Chairman
Jon Bible
Rick Gilpin
Yolanda McKeeman
Jim Moellinger

                                   p.   55