Untitled Texas Attorney General Opinion

HEATTORNEY GENERAL
OF TEXAS
AUSTIN. TEXAS 78711
November -?, 1969
Honorable John H. Flinn Opinion No. M-503
District Attorney
36th Judicial District
Courthouse, P. 0. Box 1112
Sinton, Texas 78387 Re: Whether a county depository
contract may be assigned by
a liquidator of a defunct bank
to a successor bank, and re-
Dear Mr. Flinn: lated questions.
By recent letter to this office you have requested an opinion
from this office concerning captioned matter. You state:
“The First State Bank of Aransas Pass
did not open its doors for business on September 3,
1969. Subsequently, a new bank, chartered under
the laws of the State of Texas, was opened in Aran-
sas Pass with the name of First State Bank of Ar-
ansas Pass, Texas.
“A liquidator of the Federal Deposit In-
surance Corporation has obtained possession of
the assets of The First State Bank of Aransas Pass
and coyeyed *em to First State Bank of Aransas
Pass / Texas i, with no loss to any depositors of
the prior bank.
“I understand that among the assets so conveyed
were the depository contract with San Patricia County,
the funds of the county deposited with the prior bank
under such depository contract, and the securities
pledged to secure such funds. ”
You ask, specifically:
-2411-
Honorable John H. Flinn, page 2 M- 503
“1. Is a county depository contract
such a contract which may be assigned by a
liquidator of a defunct bank to a successor
bank?
“2. Is the_successor First State Bank
of Aransas Pass ITexas- a county depository
of San Patricia County, subject to the provisions
of the depository contract of said county with the
now defunct The First State Bank of Aransas
Pass? ”
Articles 2567 and 2569, Vernon’s Civil Statutes, are the ap-
plicable statutes relating to the insolvency of a county depository. These
statutes read:
“Article 2567. Selection of special de-
pository.
“When any bank, which is a county, city or
district depository of public funds under the laws of
this State, suspends business or is taken charge of
by the Comptroller of the currency or the Commission-
er of Banking, as the case may be, the lawful county,
city or district authorities, authorized to select the
depository in the first instance, shall have the discre,-
tion and authority to select by contract a special de-
pository for the public funds in such suspended bank.
Such special depository shall assume the payment of
the amount of public funds due by the suspended bank
on the date of its suspension, including interest to that
date, and shall pay the same to the lawfully designated
public authority in accordance with the contract entered
into by such special depository. The contract shall be
for the performance of the agreement entered into be-
tween the proper public authorities designated above,
and the special depository, and shall require the pay-
ment of the deposit in such installments as may be agreed
upon, the last of which shall be paid not exceeding three
years from the date of the contract. The installments, or
-2412-
Honorable John H. Flinn, page 3 M- 503
the amount due, may be evidenced in the
discretion of the contracting parties by nego-
tiable certificates of deposit or cashier’s
checks, payable at specified dates, if made a
part of the contract. The performance of the
contract and the payment of funds described
therein shall be secured by bond, or by sever-
al bonds in case of installments, to be given by
the special depository with the same character
of sureties as is required by regular depository
bonds. The contracts and bonds of special de-
positories shall be approved by the authority
authorized by law to approve contracts and bonds
of regularly selected depositories. The rate of
interest which funds placed in a special depository
hereunder shall bear shall be fixed by the contract,
or such funds may, in the discretion of the con-
tracting parties, be non-interest bearing. Acts
1921, p. 68. ”
I’. . . .
“Art. 2569. Selection optional
“Nothing in this chapter shall require the
State, county, city or district authorities to select
any special depository as herein permitted, but
they may proceed by their lawful remedies against
the failed bank, if, in their discretion, it is best for
the public interest so to do. Id. ‘I
Both of your questions, therefore, are answered in the negative.
The statutes hereinabove quoted clearly provide what course of action
County authorities are to take in the event a county depository fails under
the conditions specified in Article 2567. You will note that in the selection
of a special depository, provisions for notice of the contract and bank ap-
plications as is required in the establishment of county depositories in the
first instance are not made.
-2413-
Honorable John H. Flinn, page 4 M- 503
SUMMARY
In the event a county depository sus-
pends business or is taken charge of by the Comp-
troller of the Currency, Coun ty authorities are to
be governed by the provisions of the Special De-
pository Statute, Articles 2567 and 2569, Vernon’s
Civil Statutes. A county depository contract is not
assignable by a liquidator of a defunct bank to a
successor bank. The successor First State Bank
of Aransas Pass is therefore not subject to the pro-
visions of the depository contract with the defunct
bank which was the subject of the inquiry.
eneral of Texas
Prepared by Ray McGregor
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Kerns Taylor, Chairman
George Kelton, Vice-Chairman
Roy Mouer
Bill Allen
James Quick
Gordon Cass
Meade F. Griffin
Staff Legal Assistant
Nola White
First Assistant
-2414-