Court Opinion

ID: 4136620
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:15:43.288767+00
Date Added: 2024-06-11T14:26:08.633261
License: Public Domain

WI&       WILSON
A~TORNEYCENERAI.
                                 February 5, 1958

    Honorable S. M. Nabrlt,             opinion >I<)
                                                  , 14;
                                                     ;,.,
                                                      -;':
                                                        "'*$
                                                           I
    President,
    Texas Southern University,         Re:  Whether Texas Soutnern Uni-
    Houston, Texas                          versity may select as Its
                                            depository a bank which has
                                            as its principal officer and
                                            as a director, a member of
                                            the Board of Directors of'
    Dear Mr. Nabrit:                      : Texas Southern Universltx.
              Your request for an opinion indicates that the Board
    of Directors of Texas Southern University is contemplating t!:.e
    selection of a depository bank for local institutional funds,
    which said bank has as its principal officer and 3s a director,
    a member of the Board of Directors of the University.
              Section 14~ of Article V of House Bill 133, Acts of
    the 55th Legislature, ,RegularSession, Chapter 385, p. 11&O,
    same being the current Biennial Appropriation Act, provides i.r!
    part as followa:
                        "C. Local Depositories. The Governing
                   Boards of the respective institutions for
                   which appropriations are made in this Article
                   are hereby authorized to select depository
                   banks for the safe-keeping of local funds other
                   than those specified in Section 14b, of this
                   Article. The Boards shall require said deposi-
                   tory banks to furnish adequate surety bonds or
                   securities to be posted for the assurance of
                   safety of such deposits. The depository bank or
                   banks so selected are hereby authorized to pledge
                   their securities for assurance of safety for sucii
                   funds. All such local funds shall be deposited
                   In these depositories within five (5) days from
                   date of collection. The Governing Board may
                   require the depository so designated and selected
                   to pay interest on deposits at a rate to be
                   agreed upon by said depositories and said Boards.'!
              The cited provision of the appropriation act ir:large:.;.
    declaratory of the general iaw on the subject.
Honorable S. M. Nabrit, Page   2   (ww-359).

          Attorney Gereral's Opinion WW-161 (i957) reaffirmed
that the Board of Trustees of a local school district could
rot select ss the schnK'.i deposltcry a bank in which a member
cf the school board was interested either as an officer, direc-
 =n cr stockholder   In this connection             Attorney
keneralts Opinions'O-5158 (1943), 0-7514 7?;4:;:'6-2656 (1940);
l40 ALR 345.
          We think that the same rules of law announced in the
foregoing opinions would be equally applicable to the selection
of a local depository for your institution.
          Your request further inquires if it would be permis-
sible for the Board of Directors to select an individual as
depository for the University, which individual would then
depositfunds received by him in the bank of his ohoice, includ-
ing a bank in which a member of your Board might be interested
as an officer, director or stockholder. Our Opinion No. WW-161
recognized the authority of a local school board to follow such
procedure, subject to certain vital limitations, pursuant to
the provisions of Article 2832 of Vernon's Civil Statutes. The
above Article, however, applies only to certain independent
school districts and has no application to institutions of higher
learning. We find no authorization for Texas Southern University
to designate an individual as its local depository.
          You are accordingly advised that it is our opinion that
the Board of Directors of Texas Southern University may not
designate a bank as Its local depository in which a member of the
University's Board of Directors is interested, as an officer,
director or stockholder.

                            SUMMARY

                     The Board of Directors of Tex;is
                     Southern University may not
                     designate as the school's
                     local depository a bank in
                     which a member of the Uni-
                     versity's Board of Directors
                     I 2 interested as an officer,
Honorable S. M. Nabrit, Page 3 (Ww-359).

                       director or stockholder. '
                                 Very truly yours,
                                 WILL WILSON
                                 Attorney General of Texas

                                 UF-  Assistant
LP:wam:pf
APPROVED:
OPINION COMMITTEE
Geo. P. Blackburn, Chairman
Morgan Nesbitt
John H. Minton, Jr.
Wayland C. Rivers, Jr.
REVIEWED FOR THE ATTORNEY GENERAL

By:   W. V. Geppert.