Untitled Texas Attorney General Opinion ( 1980 )

The Attorney General of Texas
October 30, 1980
MARK WHITE
Attorney General
Honorable John P. Parsons Opinion No. MW-261
Commissioner
Credit Union Department Re: Whether a state chartered
914 East Anderson Lane credit union may be licensed to
Austin, Texas 78752 make loans under the Texas Credit
Code, and what rate of interest
may be charged by the credit union
on such lcans
Dear Mr. Persons:
You ask two questions concerning the applicability of the Texas Credit
Code, article 5069, V.T.C.S., to the Texas Credit Union Act, article 2461,
V.T.C.S. The first question you ask is:
1. May a credit union chartered by the State of
Texas obtain a license to operate as a regulated
lender under the Texas Credit Code pursuant to
article 5069-3.04, V.T.C.S., and write loans as
permitted under Chapters 3 and 4 of the Texas
Credit Code?
Article 5069-3.04, V.T.C.S., provides:
(1) Any bank, savings and loan association or
credit union doing business under the laws of this
State or of the United States shall receive a license
upon notification to the Consumer Credit Commis-
sioner of its intention to operate under the provisions
of this Chapter. The Consumer Credit Commissioner
shall forthwith issue a license to any such bank,
savings and loan association or credit union.
The Texas Credit Code is a general statute which clearly anticipates
licensing credit unions for the purpose of transacting the type of business
characterized by chapter 3 of the Texas Credit Code. Article 5069-3.04,
V.T.C.S., is not limited by any provision in the Texas Credit Union Act, and
permits a credit union to be issued a license under chapter 3 of the Texas
Credit Code.
p. 828
Honorable John P. Parsons - Page Two (MW-261)
The second question you ask is:
2. If the credit union ls licensed pursuant to article 5069-
3.04, V.T.C.S., may that credit union charge interest at the
rates prescribed in chapters 3 and 4 of the Texas Credit Code,
or is such credit union restricted to the rates set forth in the
Texas Credit Union Act, article 2461-7.01, V.T.C.S.?
Article 2461-7.01, V.T.C.S. (Credit Union Act), states:
[Al credit union may make loans to members for such purposes
and on such security and terms as the credit committee, credit
manager, or loan officer approves, at rates of interest not
exceeding one percent per month on the unpaid montw
balance. Every loan must be evidenced by a written instrument.
(Emphasis added).
Chapters 3 and 4 of the Credit Code permit interest charges resulting in a total
allowable interest rate in excess of the 12% per annum specified in the Credit Union
Act. It is evident that the maximum interest rate permitted by the Credit Union Act
is less than the maximum interest rate provided for by the Credit Code.
The Credit Code is a general statute, &, it is a comprehensive code which
classifies and reeulates loans and lenders. The Credit Union Act is a special statute,
i.&., it applies &ly to that class of lenders &fined as credit unions. -.- See Lower
Colorado River Authority v. l&Craw, 83 S.W.2d 629 (Tex. 1935); Smith v. Davis, 426
S.W.2d 827 (Tex. 1968); Rodriguez v. Gonzales, 227 S.W.2d 791 (Tex. 1950). It is a
cardinal iule of statutory construction that a special statute prevails as an exception
to a general statute if a conflict between the two exists. See International Fidelity
Insurance Company of Newark, New Jersey v. Sheriff of Dallaounty, 476 S.W.2d 115
(Tex. Civ. App. - Beaumont 1972, writ rePd n.r.e.1; Cuellar v. State, 521 S.W.2d 277
(Tex. Crim. App. 1975). Since the Credit Union Act is complete within itself, it should
not be swplemented with provisions of a separate and distinct act which are
inconsistent with it. See Robertson v. State, 406 S.W.2d 90 (Tex. Civ. App. - Fort
Worth 1966, writ ref’d nx;).
We find no Texas case which discumes the applicability of the interest rates
allowed by the Credit Code to the Credit Union Act. The language of article 2461-7.01,
V.T.C.S., is, however, duplicated in the Federal Credit Union Act at 12 U.S.C. section
1757(5)(A)(vi), which states that the rate of interest charged by federal credit unions
must not exceed “1 per centum per month cm the unpaid balance.” This statutory
provision has been the subject of discussion by the courts in determining whether a
federally chartered credit union may charge those rates of interest provided in the
Texas Credit Code. An analogy can be drawn from those cases to the pending
question.
In Carreon v. San Antonio City Employees Federal Credit Union, 586 S.W.2d 622
(Tex. Civ. App. - Waco 1979, no writ), the court stated:
p. 829
Honorable John P. Parsons - Page Three (M+ 261)
However, under the terms of 12 U.S.C.A. section 1757(5)(A)(vi)
the rate of interest charged by federal credit unions must not
exceed 1 per centum per month on the unpaid balance inclusive
of all service charges.’ It is clear, therefore, that regardless of
the fact that ‘credit unions’ are named in the opening sentence
of Article 5069-4.01, federal credit unions may not charge the
16% interest rate authorized therein.
This view was re-stated in Brown v. Austin Area Teachers Federal Credit Union, 588
S.W.2d 629 (Tex. Civ. App. - Beaumont 1979, writ rePd n.r.e.).
The issue considered by the court in Carreon, supra, parallels your second
question and the language of the court may be paraphrased to resolve that question;
under the terms of article 2461-7.01, V.T.C.S., the rate of interest charged by state
credit unions must not exceed one percent per month on the unpaid monthly balance.
It is clear, therefore, that regardless of the fact that “credit unions” may be licensed
under article 5069-3.04, state credit unions may not charge a rate of interest in excess
of one percent per month thereunder.
SUMMARY
A state chartered credit union may be licensed under the
provisions of article 5069-3.04, V.T.C.S. (Texas Credit Code). A
state chartered credit union licensed under the Texas Credit
Code may not charge interest rates in excess of those
authorized by article 2461-7.01, V.T.C.S. (Credit Union Act).
A=
MARK WHITE
Attorney General of Texas
JOHN W. FAINTER, JR.
First Assistant Attorney General
RICHARD E. GRAY III
Executive Assistant Attorney General
Prepared by Nancy Ricketts
Assistant Attorney General
p. 830
Honorable John P. Parsons - Page Four (m-261)
APPROVED:
OPINION COMMlTTEE
Susan Garrison, Acting Chairman
Jon Bible
Rick Gilpin
Tom Pollan
Nancy Ricketts
p. 831