Untitled Texas Attorney General Opinion ( 1945 )

Honorable H. A. Jamison, Commissioner
Department of Banking
Austin 14, Texas
Dear Mr. Jamison: Opinion No. o-6808
Re: Construction of the term “general
obligations”, as used in Subsec-
tion 6, Article 7, Chapter V, of
the Texas Banking Code of 1943.
Your request for an opinion upon the above-captioned
subject matter is as follows:
“Your attention is invited to Sub-section 6 of
Article 7 Chapter V of The Texas Banking Code, which
in effect makes reference to the type of investment
a State ,bank may make in an amount exceeding its loan
limit.
“Your particular attention is invited to the
word ‘general” as used in Sub-section 6 which word
and the meaning of it is the occasion for our inquiry.
We have taken the position that some character of con-
struction must be given to the word that will lend to
it a special significance since obviously it intends
to embrace a type of obligation which would offer the
holder appropriate assurance as.to the issuing body’s
capacity to pay.
“From a Departmental point of view we have taken
the position that the word when construed in the light
of the over-all subject involved in Subrsection 6 Arti-
cle 7 alIows a State bank to make investments repre-
senting general obligations of the issuing bodies
named which are voted by the State, the County or
municipality involved and which involves the full
faith and credit of the issuing body. Stating our
position another way we feel that revenue bonds and
warrants or script, the latter issued by authority
of the Commissioners’ Court, could not be appropriate-
ly classified as a general obligation. Our question,
therefore, is as follows:
.-.
Honorable H, A. Jamison-page 2 (O-68438)
“‘Does the language of Subsection 6 Article 7
Chapter V of the Texas Banking Code exclude as lawful
investments by a State bank in an amount in excess of
the loan limit revenue bonds issued by a municipality
and/or other obligations issued under the authority
vested in Commissioners” Courts, or does it follow
that the use of the word ‘general” in Subsection 6
Article 7 requires the broader c,onstruction to the
effect that it embraces only obKgations which in-
volve the full faith and credit of the issuing body
an obligation authorized or voted upon by the people ?”
Subsection 6, referred to by you, is a part of the
enumerated exceptions to our bank-loan limit statute. It is
as follows:
‘“6. Bonds and other legally created general ob-
ligation of the State of Texas or of any county,
city, municipality or political subdivision thereof
and indebtedness of the United States of America,
the Reconstruction Finance Corporation or other in-
strumentality or agency of the United States Govern-
ment. ” (Article 342-507, Rev. Civ, Stat., Vernon’s
codification).
A word or term when used in a statute is to be
given its generally accepted and understood meaning, unless
it appears from the context that it was used in a different
sense. The generally accepted meaning of the word ““general”
is all embracing, without qualification, exception or limita-
tion, and is, of course, to be understood as pertaining to
the noun which it describes, Thus, a ““general obligation”‘,
in the business or financial world, means an unlimited or un-
qualified liability or obligation or undertaking. This view
is supported by such decisions as--
Lloyd t$;rporation v. Bannock County, 25 Pac. (2)
IllinoisPower & Light Corporation v. City of
Centralia, 11 Fed, Supp. 874;
City of Eugene v. Willomet Valley Co., 97 P. 817;
DeLoach v. Scheper, 198 S.E. 409;
Hartz v. Truckenmiller, 296 N.W. 568.
Yourare correct in classifying revenue bonds as not
being a general obligation, but are in error as to warrants or
scrip; these are general obligations.
of course, the ter’m in the connection here under con-
sideration does not necessarily mean only an obligation voted
upon by the people, although it of course includes such,It
Honorable H. A. Jamison-page 3 (06808)
is enough that such general obligation must have been “IegaJly created.”
This construction is accentuated by the context of the
statut~c. The class of obligations specially excepted in Subdivision 6
is based upon the legislative thought that they are a Class-A favored
investment.
Very truly yours
ATTORNEY GENERAL OF TEXAS
BY S/ Ocie Speer
Ocie Speer
Assistant
APPROVED SEP 18, 1945
S/ Grover Sellers
ATTORNEY GENERAL OF TEXAS
OS-MR-bjb
Approved
Opinion
Committee
By BWB
cl-law