Untitled Texas Attorney General Opinion ( 1963 )

. - E NEY GENERAL, F a‘E-XAS August 30, 1963 Honorable R. A. Benson opine0n NO. c-132 Savings and Loan Commissioner 1010 Lavaca Street Re: Interpretationof the Austin 1, Texas scope and extent of the rule-makingpower of the Savings and Loan Commls- sloner and the Building and Loan Section of the Finance Commissionwith reference to specific sections of the new Texas Savings and Loan Act codified a8 Article 652a, Dear Mr. Benson: Vernon's Civil Statutes. You have requested the opinion of this office as to the proper Interpretationof the rule-makingpower of the Savings and Loan Commissionerand the Building and Loan Sec- tion of the Finance Commissionwith respect to certain aec- tlona of the Savings and Loan Act (Acts, 58th Legislature, Regular Session, 1963, Chapter 113, page 269), codified aa Article 852a, Vernon's Civil Statutes. The Savings and Loan Act becomes effective on January 1, 1964. Your first question deals with the rule-making power conveyed by Section 5.04 of the Texas Savings and Loan Act. That section Is quoted: ?The Commlaalonerand the Building and Loan Section of the Finance Commission,act- ing pursuant to the rule-makingpower, dele- gated by House Bill 91, Chapter 198, Acts of the Fifty-seventhLegislature,Regular Sea- slon, 1961 codified as Article 342-205, Section (djf a8 the flame may be amended shall, from time to tlme, promulgate such rules and regulationsIn respect to loans by associations operating under this law as may be reasonably -655- - . Honorable R. A. Benson, page 2 (C-132) necessary to assure that such loans are In keeping with sound lending practicea and pro- mote the purposes of this Act; provided that such rules and regulationsshall not prohibit an associationfrom making any loan or lnvest- ment that a Federal association could make under applicableFederal regulations.” At the outset, we must note that in Attorney Gen- eral's Opinion No. C-127 (1963), it was held that Article 342-205 did not convey any rule-makingpower to the Commls- sioner or the Building and Loan Section. Such eneral power waa delegated in Article 342-114, and Article 382-205 merely made reference to the delegation of already existing power and establishedthe mechanics in the exercise of such power. We thus have the,sltuatlonof the Texas Savings and Loan Act in Section 5.04, quoted above, directing the exercise of a power which does not exist under the Act quoted In Section 5.04. The question then is whether by the citation of an in- correct Act the Legislaturehas made impossible the exercise of rule-makingauthority In the particulararea dealt with In Section 5.04. If we were to hold that the technical error des- cribed above operated to deprive the Commissioner and the Building and Loan Section from exercisingany rule-making power pursuant to Section 5.04, we would be placed in the position of saying that the Legislaturehad done a useless thing. The entire function and purpose of Section 5.04 would be erased from the statute books. The general provl- slons of Article 342-114 grantto the Building and Loan Section full power to make all necessary rules and regulations~ ‘,for the necessary regulationof the savings and loan industry. That Act has not been repealed and Is in full force and effect. The obvious purpose of Section 5.04 of the Savings and Loan Act was to direct the Building and Loan Section and the Com- missioner In the preparationof rules and regulations to carry out the Intent of the Legislature,expressed In Section 5.04. The fact that the Legislature,In drafting Section 5.04, made reference to an erroneousAct, one which did not grant the rule-makingpower per se, is in our view immaterial. The power to make rules exists by virtue of Article 342-114 and no attempt has been made to remove such power. Section 5.04 merely establishesthe goals toward which such rules should be directed. We hold that the general grant of rule-making power to the Building and Loan Section contained In Article 342-114 prevails over the specific mention of such power erroneouslycontained in Section 5.04 of the Savings and Loan Act, and that in making rules and regulationsfor the Savings and Loan Industry, the Building and Loan Section and the Savings and Loan Commissionerare bound by the provisions of Article -656- Honorable R. A. Benson, page 3 (C- 132 ) ;4;1;114,and the further directions contained In Section . . Your second question Is,directed to the rule- making power of the Commissionerand the Building and Loan Section with regard to the Investmentsapproved and authorized In Section 5.11 of the Savlrgs and Loan Act. Section 5.11 Is quoted below: "Every association shall have power to Invest in obligationsof, or guaranteed as to principal and Interest by, the United States or this State; In stock of a Federal Home Loan Bank of which it is eligible to be a member, and In any obligationsor consoll- dated obligationsof any Federal Home Loan Bank or Banks; In stock or obligationsof the Federal Savings and Loan Insurance Corpoi ration; in stock or obIlgatlonsof a national mortgage aaaoclationor any successor or aucL cessors thereto; In demand, time, or savings deposits with any bank or trust company the deposits of which are insured by the Federal Deposit Insurance Corporation;In stock or obligationsof any corporationor agency of the United States or this State, or In deposits therewith to the extent that such corporation or agency assists in furthering or facilitating the assoclatlon~spurposes or power; In savings accounts of any association operating under the provisions of this Act and of any Federal as- sociation;In bonds, notes, or other evidences of Indebtednesswhich are a general obligation of any city, town, village, county, school district, or other municipal corporationor political subdivisionof this State; and In such other securitiesor obligationswhich the Commissionermay approve and place on a publlsh- ed list. An association Investing In securities which are listed by the Commlsalonershall not be required to dispose of such securities if at a later time the Commissionershall remove same from list. No security owned by an association shall be carried on Its books at more than the actual coat thereof unless a different treatment Is permitted by the Commissionerin writing." -657- Honorable R. A. Benson, page 4 (C- 132 ) The forerunner of Section 5.11 was Article 88ia- 37, Section 5. This section granted authority to make ln- vestments In certain enumerated classes of property only upon the basis of rules and regulationspromul ated by the Banking Commissionerof Texas. In Article 342-11& the Building and Loan Section was directed to recommend to the Ranking Com- missioner and his successor,the Savings and Loan Commissioner, proposed rules and regulationsIn this area. The Savings and Loan Commissionerwas therefore the person who had the ultimate responalbllltyfor preparationof rules and regula- tions for the conduct of the particular Investmentsat issue here. We must note that Article 342-114 made no general grant of rule-makingpower In this particular area; rather, Article 342-114 made a very specific grant of power and such power should be consideredas limited within Its specific terms. By the Texas Savings and Loan Act it Is clear that the Legls- lature declined to carry over the old rule-makingpower which had been exercised by the Commissionerunder Article 88Ia-37. Section 5.11 carries within It authorizationfor the exercise of only very limited authority for the Commissionerand there is no general grant of,authoritywhich provides a basis for general rule-makingwith regard to Investment in securities. Section 5.11 is clear, and by Its terms leaves no room for the exercise of any additional regulatory authority In the specific area dealt with. SUMMARY An erroneous reference to a certain Act does not render null and void the authority granted In Section 5.04 of the Texas Savings and Loan Act (Article 852a, V.C.S.) as to rules and regulations to be promulgatedby the Bulld- lng and Loan Section of the Finance Commission. Under Section 5.11 of the Texas Savings and Loan Act, neither the Commlsslonernor the Building and Loan Section of the Finance Com- mission have any general authority to make rules and regulationsas to investments,and may only exercise the specific powers granted In the statute. -658- -- Honorable R. A. Benson, page 5 (C-132) Very truly yours, WAGGONER CARR Attorney General By: Malaolm L. Quick Asal&ant MLQ:ma:mkh APPROVED: OPINION COMMITTEE W. V. Geppert, Chairman Joe Trlmble John Reeves Gilbert Hargrave J. C. Davis APPROVEDFOR TRE ATTORNEY GENERAL BY: Stanton Stone -659-