Untitled Texas Attorney General Opinion ( 1958 )

WI& WILSON A~TORNEYCENERAI. February 5, 1958 Honorable S. M. Nabrlt, opinion >I<) , 14; ;,., -;': "'*$ I President, Texas Southern University, Re: Whether Texas Soutnern Uni- Houston, Texas versity may select as Its depository a bank which has as its principal officer and as a director, a member of the Board of Directors of' Dear Mr. Nabrit: : Texas Southern Universltx. Your request for an opinion indicates that the Board of Directors of Texas Southern University is contemplating t!:.e selection of a depository bank for local institutional funds, which said bank has as its principal officer and 3s a director, a member of the Board of Directors of the University. Section 14~ of Article V of House Bill 133, Acts of the 55th Legislature, ,RegularSession, Chapter 385, p. 11&O, same being the current Biennial Appropriation Act, provides i.r! part as followa: "C. Local Depositories. The Governing Boards of the respective institutions for which appropriations are made in this Article are hereby authorized to select depository banks for the safe-keeping of local funds other than those specified in Section 14b, of this Article. The Boards shall require said deposi- tory banks to furnish adequate surety bonds or securities to be posted for the assurance of safety of such deposits. The depository bank or banks so selected are hereby authorized to pledge their securities for assurance of safety for sucii funds. All such local funds shall be deposited In these depositories within five (5) days from date of collection. The Governing Board may require the depository so designated and selected to pay interest on deposits at a rate to be agreed upon by said depositories and said Boards.'! The cited provision of the appropriation act ir:large:.;. declaratory of the general iaw on the subject. Honorable S. M. Nabrit, Page 2 (ww-359). Attorney Gereral's Opinion WW-161 (i957) reaffirmed that the Board of Trustees of a local school district could rot select ss the schnK'.i deposltcry a bank in which a member cf the school board was interested either as an officer, direc- =n cr stockholder In this connection Attorney keneralts Opinions'O-5158 (1943), 0-7514 7?;4:;:'6-2656 (1940); l40 ALR 345. We think that the same rules of law announced in the foregoing opinions would be equally applicable to the selection of a local depository for your institution. Your request further inquires if it would be permis- sible for the Board of Directors to select an individual as depository for the University, which individual would then depositfunds received by him in the bank of his ohoice, includ- ing a bank in which a member of your Board might be interested as an officer, director or stockholder. Our Opinion No. WW-161 recognized the authority of a local school board to follow such procedure, subject to certain vital limitations, pursuant to the provisions of Article 2832 of Vernon's Civil Statutes. The above Article, however, applies only to certain independent school districts and has no application to institutions of higher learning. We find no authorization for Texas Southern University to designate an individual as its local depository. You are accordingly advised that it is our opinion that the Board of Directors of Texas Southern University may not designate a bank as Its local depository in which a member of the University's Board of Directors is interested, as an officer, director or stockholder. SUMMARY The Board of Directors of Tex;is Southern University may not designate as the school's local depository a bank in which a member of the Uni- versity's Board of Directors I 2 interested as an officer, Honorable S. M. Nabrit, Page 3 (Ww-359). director or stockholder. ' Very truly yours, WILL WILSON Attorney General of Texas UF- Assistant LP:wam:pf APPROVED: OPINION COMMITTEE Geo. P. Blackburn, Chairman Morgan Nesbitt John H. Minton, Jr. Wayland C. Rivers, Jr. REVIEWED FOR THE ATTORNEY GENERAL By: W. V. Geppert.