Untitled Texas Attorney General Opinion ( 1975 )

January 30, 1975
The Honorable Dolph Briscoe Opinion No. H- 510
Governor of Texas
State Capitol Building Re: Disqualification for
Austin, Texas 78711 service as a member
of the State Banking
Dear Governor Briscoe: Board
You have asked our opinion concerning, disqualifications’ for appoint:
ment of the citizen member of the State Banking Board.
The State Banking Board was created in the Texas Banking Code of
1943 and consists oft the State Treasurer, the Banking Commissioner
and a citizen member. In 1971 the Banking Code was amended and the
citizen member of the Board pras described as “a citizen of this State,
who shall represent the interests of the general public, . . . ” Acts 1971,
62nd Leg., ch. 950. p. 2884, V. T. C. S. art. 342-115. $1. At the same
time, the Legislature provided that:
(c) No member of the Board shall be an officer,
director or otherwise interested in the management
or operation of any State or national bank or savings
and loan association: provided further, that if any
Board member shall own or otherwise control any
shares of stock in any State or national bank, or
savings and loan association, that he shall file with
the chairman a list of all such stocks, describing
the security, the quantity, and the value thereof, which
list shall.be a public record of the Banking Board.
V.T.C.S., art. 342-115, 5 3(c).
Specifically you ask:
. . . would a shareholder of a bank, who owns
18 per cent of the bank’s stock, and who is an attorney
who represents the bank as its attorney, be a person
p. 2296
The Honorable Dolph Briscoe. page 2 (H-510)
who is interested in the management or operation
of a bank in such a manner as to disqualify him
under Article 342-115 from being the citizen
member on the State Banking Board.
We know of no statutory definition of the term “otherwise interested in
the management or operation of any State or national bank or savings and
loan association.” Clearly, it encompasses persons other than officers
and directors since it is axiomatic that every part of a statute should be
given effect. See Gerst v. Oak Cliff Savings and Loan Association, 432
S. W. 2d 702 (g. Sup. 1968); Independent Life Ins. Co. of America V.
Work, 77 S. W. 2d 1036 (Tex. Sup. 1934).
The statutory requirement that State Banking :Board members file a
list of bank stocks they own, implies that there is no absolute bar to bank
stock ownership by Board members; however, the caption to the 1971
amendment to the Banking Code indicates that one of the purposes of the
statute was “to prohibit ownership of certain stock and disclosure thereof. I’
The only language in the 1971 amendment which could be construed to
include the prohibition of the “ownership of certain stock” is the require-
ment that “no member of the Board shall be an officer, director or other-
wise interested in the management or operation of any . . . bank. . . . ”
Since the caption of the bill discusses its prohibitions in terms of stock
ownership, we believe those persons who own a substantial amount of stock
would be among those ‘lotherwise interested in the management or operation
of a bank. ”
There is no clear indication of the quantity of stock which would cause
disqualification, but since bank directors are prohibited from serving on
the Board, we believe a person who has a financial interest in the operation
or management of the bank which is similar to the interest of the director
would be prohibited from serving. At the very minimum a person who
owns enough stock to insure his election to the bank’s board of directors
would have a financial interest in the operation or management of the bank
similar to the interest of a director. Whether a person who owned eighteen
per cent of the stock in a bank would fall in that class would depend on the
by-laws of the bank. Persons owning a lesser amount of stock also might
be “otherwise interested in the management or operation of [a] bank,”
but whether that interest is present will depend on the facts of the case.
p. 2297
The Honorable Dolph Briscoe, page 3 (H-510)
We do not suggest that these are the only persons who, might be covered
by the statutory prohibition. A bank’s attorney might well fit in this cate-
gory if his representation resulted in his being substantially involved in
the operation or management of the bank. Furthermore his being compen-
sated to represent a bank might be inconsistent with his statutory duty to
“represent the interests of the general public. ” In determining the extent
of involvement required to constitute a person’s being “otherwise interested
in the management or operation of any . . . bank. . . .‘I or being unable
to fulfill the statutory duty to represent the interests of the general public,
we are required to be guided by the legislative declaration of State policy
in article 6252-9b. That article provides in part:
Section I. It is the policy of the State of Texas
that no state officer or &ate -employee shall ,have
any interest, financial or otherwise, direct or
indirect, or engage in any business transaction or
professional activity or incur any obligation of any
nature which is in substantial conflict with the
proper discharge of his duties in the public interest.
. . .
Section 2.
(5) . . .
(C) In defining the term ‘major state agency, ’
[which includes the State Banking Board] it is the
intent of the legislature to limit the application of
the financial disclosure requirements of this Act
with respect to appointed state officers to those
appointees who exercise substantial power and
discretion in the implementation of state programs
and in the expenditure of significant amounts of
public funds. The legislature hereby finds that the
exercise of discretion by these appointed state
officers in the granting or withholding of licenses or
permits, issuance of regulations, rulings, or orders,
p. 2298
The Honorable Dolph Briscoe, page 4 (H-510)
construction and location of facilities, and in other
matters relating to regulation, adjudication, licensing,
or expenditure of public funds, has a major impact
on every citizen of this state. Therefore, the legis-
lature finds that the potential for abuse of the public
trust by these appointed state officers is significantly
greater than in the case of appointed officers of other
state agencies.
--See also Code of Professional Responsibility, DR 9-101, EC 9-3~(V. T. C.S.,
title 14, App., art. 12. 6 8); Texas Penal Code, § 36.08 (a)and (e). ~.
These determinations’necessarily involve the resolution of.questions of
fact which are not before us; however, we believe the Governor and the
Senate should be able to utilize these guidelines to determine whether any
particular person qualifies under the language of the statute.
SUMMARY
A person who owns an amount of stock sufficient
to insure his election to the board of directors of a
bank is not eligible to serve as a member of the State
Banking Board. Persons owning lesser amounts of
stock may also be disqualified. Whether an attorney’s
representation of a bank substantially involves him in
the management or operation of a bank or prevents
his representing the interest of the general public so
as to disqualify him from membership on the State
Banking Board involves a resolution of questions of
fact. Any determination should be made in the light
of the legislative declaration of state policy in
article 6252-9b, V. T. C. S.
Very truly yours,
OHN L. HILL
General of Texas
p.~ 2299
The Honorable Dolph Briscoe, page ,5 G-w-
APPROVED:
DAVID M. KENDALL, First Assistant
C. ROBERT HEATH, Chairman
Opinion Coqmittee
p. 2300