Untitled Texas Attorney General Opinion ( 1982 )

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The Attorney General of Texas
July 19: 1982
MARK WHITE
Attorney General
Eonarable Stan Schlueter Opinion No. k%A96
Supreme Court Building
Chairman
P. 0. Box 12546
AUS,,“, TX. 76711. 2546
Committee on Financial Institutions Re: Construction of House
5121475-2501 Texas House of Representatives Bill No. 1208
Telex QlOl674~1M7 P. 0. Box 2910
Telecopier 5124475-0266 Austin, Texas 78769
1607 Main St., Suite 1400
Dear Representative Schlueter:
Dallas. TX. 75201-4709
2141742.6944 You have requested our opinion regarding the interpretation of
House Bill No. 1208, passed by the Sixty-seventh Legislature and
codified as article 2529b-1. V.T.C.S. You first ask:
4624 Alberta Ave.. Suite 160
El Paso. TX. 79905.2793
9151533.3481 May securities pledged to eecure public
deposits pursuant to House Bill No. 1208 be
pledged to the full extent of market value?
1220 Dallas Ave.. Suite 202
Houston. TX. 770026966
7131650~3666 Section 2 of article 2529b-1 clearly states, in pertinent part:
Investment securities or any ownership or
606 Broadway, Suite 312 beneficial interest [tlherein shall be eligible
Lubbock. TX. 79401.3479
and lawful security for all deposits of public
606i747.5236
funds of the State of Texas and anv- uublic . anencv
to the extent of the market value the;eof:
4308 N. Tenth. Suite B (Emphasis added).
McAllen. TX. 76501.1685
51216824547
Prior to the enactment of this bill, our laws had differing valuation
rules for various types of depositories. One obvious intent of
200 Main Plaza. Suite 400 article 2529b-1 was to remove those differences by stating a uniform
San Antonio. TX. 76205.2797 rule. Texas courts have long recognized a fundamental rule of
512/225-4191
statutory construction. set out in Mlngus v. Kadane, 125 S.W.2d 630,
631 (Tex. Civ. App. - Fort Worth 1939, writ dism’d judgmt. car.).
An Equal Opportunity! wherein the court cites volume 59, page 910 of Corpus Juris, stating:
Afflrmatl~e Action Employer
Where two legislative acts are repugnant to, or in
conflict with, each other, the one last passed,
being the latest expression of the legislative
will, will, although it contains no repealing
clause, govern, control, or prevail, so as to
supercede and impliedly repeal the earlier act to
the extent of the repugnancy.
p. 1772
c
Honorable Stan Schlueter - Page 2 W-496)
Article 2529, V.T.C.S.. most recently amended in 1967. see Acts
1967, 60th Leg., ch. 738, at 1991, enumerates the securitieshat a
bank may pledge as security for state funds in order to qualify as a
state depository. This statute then provides as follows:
All of such securities may be accepted by the
[State Depository] Board, provided the aggregate
amount thereof is not less than twenty per cent
(20%) greater than the total amount of state funds
that they secure; provided that the amount of all
bonds and other obligations offered as collateral
shall be determined by the Board on the basis of
either their par or market value, whichever is
less.
Article 2529b-1 was enacted in 1981. This statute does not have a
repealer clause, but section 3 provides as follows:
The provisions of this Act shall be cumulative
of all other existing laws, but shall be full and
complete authority for investment securities to be
eligible to secure public funds without reference
to any other law. (Emphasis added).
Article 2529b-1 does not repeal in toto any prior statutes
relating to security for public deposits. However, considering the
general rule followed in Mingus, it is clear that any prior
conflicting statutory provisions regarding valuation of pledge
securities were repealed by the enactment of this statute. It
provides that “[i] nvestment securities... shall be eligible and lawful
security for all deposits of public funds... to the extent of the
market value thereof .‘I E2. “Investment securities” include
government securities and obligations issued by a public agency. The
terms “government securities” and “public agency” are defined in
section 1 of article 2529b-1.
Consequently, the securities included within the definitions of
“[l]nvestment securities” in the later enacted statute are lawful
security for the deposit of public funds “to the extent of.. . market
value. ” Securities, if any, that are not included within the
definition of “[iInvestment securities” inarticle 2529b-1 and that
are specifically listed in article 2529 are to be valued at “either
their par or market value, whichever is less.”
The Sixty-seventh Legislature also passed another statute with
similar provisions. House Bill No. 2050, entitled the Bond Procedures
Act of 1981 and codified as article 717k-6, V.T.C.S.. was passed and
became effective only days after House Bill No. 1208. House Bill No.
2050 has broader definitions of issuers of public securities and those
p. 1773
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Honorable Stan Schlueter - Page 3 (MU-496)
securities eligible to pledge against deposits of public funds than
House Bill No. 1208, but has the same valuation rule wherein it
states:
Said bonds also are eligible to secure
deposits of any public funds of the state or any
political subdivision or public agency of the
state, and are lawful and sufficient security for
the deposits to the extent of their market value,
when accompanied by any “nmatured coupons attached
to the bonds. (Emphasis added).
V.T.C.S. art. 717k-6, 09. Thus. House Bill No. 2050 reiterates the
legislature’s will that “market value” be the rule for valuation of
eligible securities pledged to secure public deposits.
Even though article 2529b-1 now directs the State Depository
Board to value pledged securities “to the extent of the market value
thereof ,‘I the board retains the power “to reject any and all
collateral or surety bonds tendered by a state depository, without
assigning any reason therefor,” and its action in doing so is final
and not subject to review. V.T.C.S. art. 2529. Moreover, any
securities pledged by a depository are subject to the following
provision of article 2529. V.T.C.S.:
In the event the market value of the securities
pledged by any depository shall decrease to the
point where the collateral value of said
securities, as fixed by the Board, is less than
the amount of said funds on deposit in said
depository, the Board shall require additional
security in order to equalize such depreciation.
Your second question relates to the form of such securities. You
specifically have asked:
Are bonds, fully registered, registered as to
principal only and bonds registered as to interest
only eligible to secure deposits under House Bill
No. 1208?
The term “fully registrable” means, with reference to public
securities, that both the principal and interest of such securities
are payable only to the registered owner thereof. V.T.C.S. art. 715b.
§2(2). Public securities may be issued in a form that makes them
either unregistrable, fully registrable or registrable as to principal
only. -Id. 13. See also V.T.C.S. art. 717k-6, 94.
House Bill No. 1208 contains no limitations on the form of the
investment securities eligible to secure public deposits. House Bill
No. 2050 provides:
p. 1774
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Honorable Stan Schlueter - Page 4 (MW-496)
Sec. 4. The governing body of any issuer is
authorized to issue bonds and the interest coupons
appertaining thereto, if any, in such form or
forms, with provision for registering such bonds
as to principal or as to principal and interest,
or with provision for changing the form or forms
of such bonds and interest coupons, if any, in
such manner as shall be specified by the governing
body of the issuer in the resolution, order,
ordinance, or other proceedings authorizing the
bonds.
Sec. 5. The governing body of any issuer ia,
authorized to issue bonds constituting a series of
any number of bonds, or a single bond, payable in
one stated amount or in stated installments to the
bearer, or to a registered or a named payee, or to
the order of, or to the successors or assigns of,
such registered or named payee, and provision may
be made for the conversion of any bond or interest
coupon, upon request or demand of the bearer...
registrable as to principal or as to principal and
interest, or into fully registered bonds without
interest coupons, or into any other form....
(Emphasis added).
V.T.C.S. art. 717k-6. %%4. 5. Thus, House Bill No. 2050 is virtually
limitless as to the form of the eligible securities. Such securities
are eligible to be pledged in bearer form with coupons attached
registered as to principal or as to principal and interest, or into
fully registered bonds without interest coupons, or in any other form
authorized by the governing body of the issuer.
SUMMARY
Securities pledged to secure public deposits
pursuant to article 2529b-1 may be pledged to the
full extent of their market value. They are
eligible to be pledged in bearer form with coupons
attached, registered as to principal or as to
principal and interest, or into fully registered
bonds without interest coupons, or in any other
form authorized by the governing body of the
issuer.
M@
Attorney General of Texas
p. 1775
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Honorable Stan Schlueter - Page 5 (t-w496)
JOHN W. FAINTER, JR.
First Assistant Attorney General
RICHARD E. GRAY III
Executive Assistant Attorney General
Prepared by Ladd D. Pat1110
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Susan L. Garrison, Chairman
Rick Gilpin
Patricia Hinojosa
Ladd D. Pat1110
p. 1776