Untitled Texas Attorney General Opinion ( 1942 )

GERALD C. MANN
Honoreb&e J; F. Holubec
Ctititg~Auai~or
Lavaca County
Hallettsville, Texas
Dear 3lr: Opinion No. O-5010
Re: Can the commissioners' court of a
county legally pay to a Depository
for county and school funds an a-
mount of money as a service charge
to the bank acting as such Deposi-
tory, and other related questions?
Your letter of December 8, 1942, raquest'ng the
opinion of this department on the questions stated',therein
reads in part as follows:
"Please give me your opinion on the following:
"'Can the Commissioners Court of a county
legally pay to a Depository for County and School
Funds an amount of money as a service charge to
the Bank acting as such Depository, and if so,
can such money be prorated to the various funds
of the County and the funds of the various School
Districts, or must such payment, if permitted to
be paid, be taken out of the General Fund of the
County?
"Explanatory wish to state that in Lavaca
County we are confronted with a peculiar situation
and that is that we are not apt to get a bid for
County ana School Depository for 194X-44 as no
bank desires to be depository because they all
claim it means a loss to them because of the re-
strictions placed upon banks by the Federal Gov-
ernment in making loans, and further the fluctu-
ating market on securities that they will be
compelled to put up as security for the County
and School Funds, which may likely result in a loss
to them.
"The laws,relating to County Depository are
Art. 2544, 45-46-47, etc.
Konorable J. F. Holubec, page 2 O-5010
"Art. 2550. Deposits not applied for:
"Under this 1ast~Article it says that the
Commissioners Court shall have the power, and it
shall be their duty to deposit the funds of the
County with any one or more banking corporations,
etc.-- Any bank,or banking cbncern receiving De-
posits under this Article,shall execute a bona in
the manner and form provided for depositories of
county funds, etc.
"The Article seem8 very simple, but there is
no way in compelling a Bank under the circumstances
of Art. 2550 to execute a bond.
"The biggest objection that the Banks have Is
the enormciuswork necessary in keeping the School
Funds.
Chapter 2,.Title 47, Vernon's Annotated Civil Stat-
utes contains the statutes pertaining to county depositories.
Article 2549 (Vernon's Annotated Civil Statutes) provides in
part:
,IOS... All county depositories shall collect
all checks, drafts and demands for monev so deposited
with them by the county and when using due diligence
shall not be liable on such collections until the
proceeds thereof have been duly received by the ae-
pository bank, provided that any expense incurred in
collection thereof by the depository, which'ths de-
pository is not allowed or permitted to pay or absorb
by reason of any act of Congress of the United States
or any regulation by either the Board of Governors
of the Federal Reserve System or the Board of Directors
of the Federal Deposit Insurance Corporat$on, shall be
charged to and paid by the county. . . .
It is a well established principle of law that
commissioners' courts are courts of limited juriscliction,
in that their authority extends only to matters pertaining
to the general welfare of the respective counties and that
their powers are only those expressly or impliedly conferred
upon them by law, that is, by the Constitution and statutes
of the state.
We have been Unable to find any statute or consti-
tutional provision authorizing the commissioners' court of a
county to legally pay to a county depository any amount of
Honorable J. F. Holubec, page 3 o-5010
money as a service charge to the bank acting as such deposi-
tory, except any expense incurred in collection of such pro-
ceeds by the depository, which the depository is not allowed
or permitted to pay or absorb by reason of any act of Congress
of the United States or any regulation by either the Board of
Governors of the Federal Reserve System or the Board of Di-
rectors oftthe Federal ,Deposit Insurance Corporation, Article
2549, supra, expressly provides that such expenses so incur-
red shall be paid by the county. Therefore, in view of the
foregoing statute your first question is respectfully answered
in the negative, subject to the exception heretofore mentioned.
This opinion is not to be construed that the above mentioned
expenses are's service charge, but is to be construed as mere-
ly holding that the county Is authorized to pay such expenses.
As we have answered your first question in the neg-
ative your second question contained In the first paragraph
of your letter which reads:
II
. . . can such money be prorated to the var-
ious funds of the County and the funds of the var-
ious School Districts, or must such payment, if per-
mitted to be paid, be taken out of the General Fund
of the County?"
requires no answer.
Article 2550, Vernon's Annotated Civil Statutes pro-
vides:
"If for any reason no applications are sub-
mitted by any banking corporation, association or
individual banker to act as county depository or
in case all applications shall be declined, then
in any such case, the Commissioners Court shall
have the power, and it shall be their duty to de-
posit the funds of the county with any one or more
banking corporations, associations or individual
bankers in the county or in the adjoining counties
in such amounts and for such periods as may be
deemed advisable by the Court. Any bank or banking
concern receiving deposits under this Article shall
execute a bond in the manner and form provided for
depositories of county funds with all the ConditiOns
provided for same, the penalty of said bonds to be
not less than the total amount of county funds de-
posited with such bank or banking concern. Acts
1905, p. 393; Acts 1917, p. 19; Acts 19% 44th
Leg., p. 394, ch. 152, 8 1; 1 Acts 1937, 45th Leg.,
p. 1298, ch. 484, 9 1.”
Honorable J. F. Holubec, page 4 O-5010
It will be noted that under the provisions of the
foregoing statute where no applications are submitted by any
banking corporation, association or indiviaual banker to act
as county depository or in case all applications are declined,
then in any such case, the commissioners' court shall have
the power, and it shall be their duty to deposit the funds
of the county with anyone'or moresbanking corporations, asso-
ciations or individual bankersin the county or in adjoining
counties in such amounts and for such periods as may be deemed
advisable by the court. Said statute further provides in
part "Any bank or banking concern receiving deposits under "
this Article shall execute a bond in the manner and form pro-
vided for depositories of county funds with all the conditions
provided for same, the penalty of said bonds to be not less
than the total amount of county funds deposited with such
bank or banking concern."
It is our opinion where any banking corporation,
association or individual banker accepts any county funds
as authorized by Article 2550, supra, said banking corpora-
tion, association or indiviaual banker is required to execute
the bond or bonds mentioned therein. Where such banking cor-
poration, association or individual banker acts as county de-
pository for the public funds of a county the law imposes
upon them all the duties of a fully qualified and regularly
appointed county depository (New Ansterdam Casualty Company
v, First National Bank of Gilmer, Texas, et al., 134 S. W.
(2) 470; Sullivan v. City of Galveston, 17 S. W. (2) 478, af-
firmed Texas Commission of Appeals, 34 S. W. (2) 808; Fidelity
and Deposit Company of Maryland v. Missouri State Bank, 44
Fed. (2) 19).
Where there has been no selection of the county ae-
positorg for trust funds, Section 14 of Article 2558a, Vernon's
Annotated Civil Statutes, provides in effect that each county
or district clerk having the custody by law of any money, evi-
dence of debt, script, instrument of writing, or other legal
proceeding, shall seal up in a secure package the identical
money or other article received by him and deposit the same
in some iron safe or bank vault.
Trusting that the foregoing fully answers your in-
quiry, we are
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Honorable J. F. Holubec, page 5 O-5010
Yours very truly
ATTORNEY GENERAL OF TEXAS
By s/Ardell Williams
Ardell Williams
AssIstant
AW:mp:wc
APPROVED DEC 21, 1942
s/Gerald C. Mann
ATTORNEY GENERAL OF TFXAS
This Opinion Considered And Approved In Limlted Conference