Untitled Texas Attorney General Opinion ( 1971 )

. --a. .
THE ATPBRNEY GENERAL
OF TEXAS
March 5, 1971
Hon. Ward W. Markley Opinion No. M-*802
County Attorney
Jasper County Courthouse Ret Selection of a depository
Jasper, Texas 75951 for county funds.
bear Mr. Markley:
Your request for an opinion aska the following two
questions~:
Piret:
"I respectfilly request an opinion on
whether or not the Comm$ssloners'Court can
further conelder the .deelgnatlonof a -County
Depoiiltory,ata special meeting after a De-
pository was selected at the regular meeting
InFebruary, and on that same date the regular
meeting was adjourned."
Second:
Whether Item 2 of the bid of the First
State Bank of Jasper Invalidated the bid of
that bank.
You state In your requeet that the CommlsslonersCourt
at its regular meeting on February 8, 1971, opened bids for
'designationof a county depoeltory and that two blda were received.
After a dlscusalon, a motion was made, seconded, and adopted to
accept the bid of the First State Bank of Jasper, and the regular
meeting was adjourned. Subsequently,the CommlaslonersCourt called
a special meeting for the purpose of reconsidering the bids and
notice was Issued of thls,meetlng.
Articles 2544, 2545 and ~46, Vernon'8 Civil Statutes,
provide in part:
"Art. 2544. The CommlselonersCourt of
each county Is hereby authorized and required
at the February Regular Term thereof next
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Hon. Ward W. Markley, page 2 (M-802)
following each general election to enter Into
a contract with any banking corporation,associa-
tion or individual banker In such county for the
depositing of the public funds of such county in
such bank or banks. Notice that such contracts
will be made by the CommissionersCourt shall be
published by and over the name of the County
Judge, once each week for at least twenty (20)
days before the commencement of such term In
Bbme newspaper published In said county; . . .
"Art. 2545. Any banking corporation,assocla-
tlon or Individual banker In such county desiring
to be designated as county depository shalltmake
and deliver to the County Judge an application ap-
plying for such funds and said application shall
state the amount of paid up capital stock and
permanent surplus of said bank and there shall
be furnlshed~with sald~appllcatlona statement
showing the ,flnanclalcondition of said bank
at the date of said 'applicationwhich shall be
delivered to the County Judge on or before the
first day of the term of the CommissionersCourt
at which the selection of the depositories 1s to
be made . . .
"Art. 2546, It shall be the duty of the Com-
missioners Court at ten o'clock a.m. on the first
day of each term at which banks are to be selected
as county depositories, to consider all applications
filed with the County Judge, cause such applications
to be entered upon the minutes of the Court and to
select those applicants that are acceptable and who
offer the most favorable terms and conditions for
the handling of such funds and having power to reject
those whose management or condition, in the opinion
of the Court, does not warrant!,placingof county
funds In their possession. . .
The statutes above quoted grant to the commissioners
court the authority to select county depositories and specifies
the procedures and prerequisites to such selection.
General's Opinions M-107 (1967),
V-1166 (1951), WW-33 (1957) and
Farmers Guaranty State Bank, 289
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lion.Ward W. Markley, page 3 (M-802)
error ref.); Hurle v. Citizens National Bank, 229 S.W. 663
(Tex.Clv.App.1921: n.w.h )* Coffee v. Borger State Bank, 38
S.W.2d 187 (Tex.,Clv.App.
is&, n.w.h.J,
In Attorney General's Opinion M-33, supra, It was
heldr
"The purpose of the procedures prescribed
by the statutes relating to the selectionof a
county depository Is to secure to the county a
safe, responsible depository for Its funds with
a return of Interest for the use thereof. ~Tlme
Is not of the essence in the accomplishmentof
these ends; therefore, they should not be
sacrificed to thenstrict compliancewith the
time requirements of these statutes,"
It was further held that It was wl.thlnthe discretion
of the commissioners court to defer the selection of the de-
pository to a day other than the ftist day of the February Term.
ecky 'v. City of Yoakum, 35 S,W.2d..492(Tex.Clv.
App. 1931~) 52 S W 26 240 (Tex.Comm.App.1932), it was con-
tended that the deslgAa;lon of a city depository was void because
the designation was made during the month of June Instead of July
as required by Article 2559, and the notice of intention was given
by letter rather than publication. In upholding the designation
of the city depositdry the court there stated at 35 S.W.2d 498:
"Article 2559 provides no penalty and Imposes
no forfeiture in case of a non-compliancewith its
literal provisioner There la no declaration In the
act that, If the designation of a depository Is
made at a time other than at a regular meeting In
July of each year, as stated In the act, such
designation should be void. . . . (T)he provisions
of the statute declaring . . . the time for making
such designation . . . is directory only and not
mandatory . . . . (W)hen a formality is not abso-
lutely necessary for the observance of justice,
but, Is introduced to facilitate Its observance,
Its omission, unless there Is an anfulling clause
In the law, will not annul the act.
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Hon. Ward W. Markley, page 4 (M-802)
It was held In Attorney ffeneral'sOpinion Number O-3837
(1941) that a contract between the bank and the county constltut-
lng the selection of a depository cannot be terminatedat will
by either party to the contract; therefore the bank selected as
a depository remains the county depository during the term of the
contract.
In Attorney General's Opinion v-1166 (1951), It was
concluded that,
"In selecting a depository for county
funds, the commissioners'court may exercise
its discretion in determining which appll-
cants 'offerthe most favorable terms and
conditions for the handling of such funds,'
and Its action Is not subject to review un-
less an abuse of discretion Is shown . . . .'
In Attorney General's Opinion WW-33, the following ruling
was made:
"The County Commissioners'Court may law-
fully consider and accept the application of a
Bank as a County Depository where the application
did not contain a statement showing the financial
condition of the bank but the President orally
supplied such Information and subsequentlyaub-
mltted It in proper written form on the date the
applicationswere opened and consideredby the
Court,"
In Citizens State Bank of Roby v. MoCaln, 274 S.W.2d
184 (Tex.Clv.App.1955) It h Id that h there was no ap-
proval by the commlsslo~ers!%rteof secur~t``~ furnished by a
bank followed by an order designating the bank as county de-
pository, there was no final designation or selection of the
bank as the county depository. See also Llnz v. Eastland County,
39 S.W.2d 599 (Tex. Comm. App. 1931).
In view of the foregoing, you are advised that If the
commissionerscourt has made a selection of a bank as county de-
pository and has approved securities furnished by the bank, such
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Hon. Ward W. Markley, page 5 (M-802)
selection may not be retracted by the commlsslonerec-t.:. On
the other hand, If the commlsslonerscourt has not approved
securities furnished by the bank, the selection on February 8,
1971, Is not final and the commissionerscourt may postpone the
selection of a depositoryuntil the date set by the court for
the purpose of reconsideringthe bids In question., In the event
the commissioners court did not make a final selection on February 8,
1971, then you are advised that It is within the discretion of
the commissionerscourt to determine which applicant offers the
most favorable terms and conditions for handling county funds.
In answer to your question concerning the validity of the
bids submitted by the two banks making application, it Is our
opinion that both the bids of the Flrst.StateBank of Jasper,
Texas, and the First National Bank of Jasper, Texas, are valid ap-
plicationa for depository for Jasper County funds for the biennium
1971-72.. The legal notice given by the c~mmlsslonerscourt stated,
."in awarding the contract the Commission&~'
Court will consider the rate of interest the
county will redelve on all accounts other than
checking accounts and the amount of Interest the
county will begcharged on any short term obll-
gations the -county,maywish to Incur. Also, any
addltlonal services offered by the.bank will beg
considered."
Both applicationsstate the rates of Interest each bank
agrees to pay on time deposits. In addition, each bid furnishes
additional Informationconcerning the amoupt of Interest the county
will be charged on obligationsthe county may wlsh.to Incur.
Neither bid, however, states in the appllcatldn the amount of paid
up capital stock and permanent surplus of the bank, nor does the
application contain a statement of the financial conditionsof the
bank at the date of said application,all of which Is required In
Article 2545. However, since no question Is raised on this matter,
we assume that such Informationwas furnished the commissioners
court by some other Instrument. In any event, such information
may be ,supplledorally.and subsequentlysubmitted In proper written
form. Attorney General's.OplnlonWw-33 (1957).
The only question raised concerning the validity of the
applications relates to Item 2 of the application by the First
State Bank of Jasper, Texas. Item 2 reads as follows:
“2. In the event the County finds It neces-
sary to borrow funds, we agree to pu@zhaseyour
lawfully Issued General Obllgatlon Time Warrants
at an Interest rate according to the following
schedule in a total amount up to $125,000.00
and maturities not to exceed 5 years from date
of Issue:
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Hon. Ward W. Markiey, page 6 (M-802)
vFor Time Warrants which mature during the
life of this contract: a total charge for Interest
of 1 penny per Warrant.
"For Time Warrants which mature at a date
beyond the maturity of this contract: so long as
The First State Bank, Jasper, Texas, remains as
the exclusive Depository of all County funds,
under this contract or subsequentcontracts, a
total charge for Interest of 1 penny per Warrant
will be made; should The First State Bank, Jasper,
Texas, not remain as the exclusive Depository of
all County funds, then lnterest.wlllbe charged
only from the date which the exclusive Depository
Agreement Is terminated to maturity of the Warrant
at a simple Interest rate of 1.94s per annum.”
It Is seen that Item 2 above quoted Is merely lnforma-
tlon as to the amount of Interest which will be charged the county
In the event It Issues ffeneralObligationTime Warrants. There-
fore, Item 2 constitutes part of the Informationrequested.ln the
legal notice uoted. This office concluded in Attorney General’s
2 (1951) as follows8
Opinion v-1.1.6
"In selecting a depository for county funds,
the commissioners’court may exercise Its discretion
In determining which applicants 'offer the most
favorable terms and conditions for the handling of
such funds,’ and Its action 1s not subject to re-
view unless an abuse of discretion Is shown."-
SUMMARY
The two bids Involved In your request are
valid applications for the county depository and
It was within the discretion of the commissioners
court to determine which applicant offers the most
favorable terms and conditions for handling county
fund8.
If the commissioners court has made a selec-
tion of a bank as county depository and the bank
has qualified, such selection may not be retracted
by the commissioners court. If a depository
selection by the commissionerscourt Is not
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Hon. Ward W. Markley, page 7 (M-802)
final, such selection may be postponed for the
reason that such selection need not be m&de on
the first day of the February Term of the Com-
missioners Court.
Prepared by John Reeves
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Kerns Taylor, Chairman
W. E. Allen, Co-Chairman
William J. Craig
Gordon Cass
Roland Allen
Ben Harrison
NEADE F. GRIFFIN
Staff Legal Assistant
ALFRED WALKER
Executive Assistant
NOLA WHITE
First Assistant
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