Untitled Texas Attorney General Opinion ( 1959 )

., .. / EP GENERAL Honorable Zollie Stsakley %hion No. WW427 becrut4ry 6f state Aw tin, Texas R e : Oo r ufle~tlo o fk l to r o lg a lwKo d b ulkto 4 etM ta o ta - mea twr tr y uk r iuth o8th Dear Sk: o fTo me. This ‘Opinion is Lsswd in reapours to your latbr wlua%ln some qUestion Is ralsed as to who&or or not a aatloaal b* located in a foreign rotate caa~quallfy aa a trltamontary trustor in the 8tata of Trxas. This oplnlo11wll1 be addisssad prlaeipally to ~JIOqwrtiar 6f athrthr or not a national bank domiciled ,tn saothoti atab may act U terbmeatary trustee of certda trwt~property located tn Texas. We do sot pus Upon tha qlres- tbn of whether or not a national bank may come late the State ob’Texaa to eatabllsh an sfflccl or’braach, or do a trust bw,lwsr. WhM eorUtltxtas doing bUstws6 la Texas, IO aa to r-squire a cett&rea# of lsthority by a forsip corporatton, is governed by the TSXM Bvrlaorr Corporation Act. Artlcla 8.01, B(11) of that Act states: “B. Without excluding othar actlvltlos wblch may not con~tltute transactlag b&nerr in thb ICbto, u ford corpor&t’loa shalt not be considered to bo tru6rc -frd% wss la thu lowfag actlvltia~: Y . . . “(11) Exerclrhg the power8 of lwrrcatmr or *dmla- lstrator of tha ertato of a noareridrat decndoat uadvr a- clllary letters ‘Lsswd by a tourt of tbhlr St&w, or l xWCI#lmg the powers of a trusta ua&r the will of a asmrtdont de- cedent or under an inter vlvor trust created by e noarorl- dent of thlr Stata, lf the axercKss of such wwk. h d@mr cage, ‘kill not invo~vo actlvitbr Welch m&d k ~Wd to coIuMtmts tlw traMsct1ag of lua~lawsr ln tbu 5tue ix tbr cam0 cd a forelgth corpo*rtlon Mtinu 1s lt8 011 Sl**t,’ @mphasU add e d . I It 1s omr rladerrtaadlng that the actlvltler ahlch tbo fbrrlp nrtloarl bank dusiru to perform In thls State are’ not such as would eoa#tltxta traas- actlng bushess, lf the corporatloa wara actlng In Its own right. Hon. Zollie Steakley, page 2 (WW-627) National banks were created under the Natlonal BankIng Act which is set forth in Chapter 2, Sections 21 to 213, Title 12 U.S.C.A. Section 24 prescribed the powers of national banks but did not include any authority to act ln a fiduciary capacity. The Federlvl Reserve Act, as amended in 1918, Section 11(k), now Section 248(k). Title 12 U.S.C.A., conferred upon the Board of Governors of the Federal Reserve System the power -and authority to grant by special permit to national banks, the authority to act in fiduciary capacities when not In contravention .of state law. Pertinent parts of that Act read as follows: ‘The Board of Governors of the Federal Reserve System shall be authorized and empowered: “(k) To grant by special permit to national banks applying therefor, when not ln contravention of State or local law, the rlght to act as trustee. executor, adminis-- trator, registrar of stocks and bonds, goardlan of es’tates, assignee, receiver, committee of estates of lunatics, or in any other fid.uciary capacity in which State banks, trust c,ompanies, or other corporations which come into competition with national banks are permitted to act un- der the laws of the State in which the national bank is located, *Whenever the laws of such State authorize or permit the exercise of any or all of the foregoing powers by State bapks, trust companies, or other corporations which compete with national banks, the granthg to and the exercise bf such powers by national banks shall not be deemed to be in,contravention of State or local law within the meaning of this chapter.” Thus, the Federal statutes empower the Federal Reserve Board to grant, by a special permit, to natfonal banks applying therefor, when not in contravention of State or local law, the right to act as trustee, administrator, executor, guardian, etc., or In any other fiduciary capacity in which State banks, trust’companies, or other corpolations would come lnto competition with national banks under the laws of the State In which the national bank is located. The onIy.question 1s whether. or,‘not the laws of the State of Texas prohibit a foreign corpbration’coming lhto this State to act’in a fiduciary or trust capacity. There seem to be only hno stabites In the State of Texas which relate to this question. The ftrst 1s Article 342-902 which provldes: Hon. Zullle Steal&y, page 3 (WW-627) ‘It &a11 be unIawfu1 fti w person; caipora- tton, firm. partnership, asaoclatlon or common law hut: *(l) To eoaduct a banktug or trust bushes8 or to hold oat to the pnbIic that it ln conducting a banh- lug or trast baa&mm;. . . *Provided. however, that this Article hall not apply to (1) nattonal banksI (2) state banks8 (3) otharcorporatloas heretofore or hereafter organ- iaed nnder the laws of thts stats or of the United States to the extent that such corporations are au- thorked undar thair charter or the laws of this state or of the Unfted States to conduct such bnsl- new or to use such terms. . .u ‘Since the Leglslatnre has been fit to exempt curporatlons organl%ed undar the laws of the United States (12 U.S.C., Sac. 21)--to the extent that such corporations are anthorlasd under the laws of the United States to act as testamentary trustees on trust property located la Texas (12 U.S.C.. See; 248(k) )--from the prohlbftlon of Article 342-902. there appears to be no Texas statute prohlbltlng a national bank, not domlclled ln Texas from acting la the abovs mentioned capacity ie the Stats of Texas. The only other s tatate which relates to the questlon of forefgn corporathus coming to Texas to angaga la the tiwst,bustness as dis- tlngulahed ,from trust functions 1s Article 1513a. This artlcIe prevldem: “See. 2. Traat companies may be created,, and any corporation, however created, may amend itr charter h compliance herewith, or a fore1 corporation may obtaln a cartlflcate of author f”ty to do bumhum Ln Texas for the followlng pnrpose: “To act as trustee, executer, admbilstrator, rdlan when designated by any person, corpo- on; or court to do so, and aa agent for the per- rat F” Or formance of any lawful act, 1ncIadiag the right to receive depostta made by agencter of the United States of Amerfca for the authorfwd account of any 1adlvldualI to ret a* attorney-in-fact for reciprocal or lnter-lnsrr- ance uxchaage.* Hon. Zollie Steakley, page 4 (WW-627) We do not feel that this particular statute is applicable to the question raised, because the national bank involved here ts not desirous of a certificate of authority to do a trust business in Texas, but wants to act only as a testamentary trustee of a foreign trust with regard to certain trust property Located in Texas. Thus, current authority prevails that a national bank may go outside its domicile to act in a trust capacity if the state to which it desires to go does not expressly, or by necessary implication, prohibit its entry. The prohibitive statute (Article 342-902, V.C.S.)has expressly excluded ucorporations organized under the laws of the Unites States”, of which a foreign national bank is one, thus indicating the necessary tolerance, when read in conjunction with Article 8.01B (11). to authorize their entry to perform certain trust functions. We do not pass on the question of a fore@ corporation performing trust functions which would constitute transacting business under the emphasised portion of Article, 8.01B(ll). SUMMARY National banks domiciled in a foreign state may come into Texas to perform fiduciary functions If a state bank in the state of the national bank’s domi- cile may act outside its borders in a fiduciary capacity. Texas law does not prohibit a foreign national bank from coming into the State to act as a testamentary trustee. Very truly yours, WILL WILSON Attorney General of Texas BY C. Dean Davis Ass is tant CDD:j’g Hon. Zoliie Steakley, page 5 (WW-627) APPROVED: OPINION COMMITTEE: Geo. P. Blackburn. ChaIrman C. K. Richards Robert T. Lewis Leonard Passmore R.EVIEWED FOR THE ATTORNEY GENERAL BY: W. V. Geppert