Untitled Texas Attorney General Opinion ( 1978 )

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