Case Information

*1 THEA~~~~NEY GENERAL OFTEXAS

Hon. J. T. McMillan Opinion No. O-3928

Deputy Commissioner Re: Whether or not the Banking Com- Department of Banking missioner has authority to allocate Austin, Texas the current lump-sum departmental ap-

propriation to the Banking Department for ing and loan associations, then salaries and expenses of bulld- loan and Dear Mr. McMillanl brokerage companies, and credit unions.

We beg to acknowledge receipt of your letter asking for a construction of the current appropriation act State Banking Department insofar as it concerns embracing building and loan associations, loan and brokerage companies, and credit Your precise questions are as unions. follows:

‘I (1) Does the Banking Commissioner have authority allocate items the Second Division between Building and Loans, Loan and Brokerage and Credit Unions?

“(2) If so, can the Banking Commissioner employ same method of allocation as was evidently used by the Legislature- To illustrate, can the Banking Commissioner determine administratively that the cost of enforcing Building and Loan Law shall not exceed $12,425.00 (70% of $17,750,00); that of enforcing the Loan and Brokerage Law shall not exceed $3%550.00 (20% of $179750.00) and the cost of enforcing the Credit Union Law shall not ex- ceed $1,775.00 (10% of $17,750.00), and having done so allocate to building and loan items or portions of items under the Second Division without regard to the actual purpose of expenditure totalling $12,425.00; loan and brokerage companies items or portions of items totalling .$3,550.00 and to credit $1,775.00, unions items or portions of items totalllng and direct payment accordingly?

“(3) Zf you have indicated in response the second question that the Banking Commission,er can employ the meth- od of allocation above outlined, then if the Commissioner has made such allocation and discovers the allocations are not in accordance with fact, can he change such alloca- tion so as to accord with facts as they develop? If you, in answer to QuestionNo. 2, have indi-

“(4) cated the method of allocation outlined in that ques- then please indicate the method of tion is not usable, *2 allocation which should be used by the Commissioner,

“(5) If there is any different rule applicable salaries provided for under the appropriation and other as aistin- guished from travel expense items of expense, please indicate what this difference may be and the proper method of allocation of each.”

The appropriation the division of the department above mentioned is as follows:

“29. Supervisor Bldg. ma Loan and Loan

and Brokerage and Credit Unions) eO.OOO..OeO $ 4,250.OO 30. &Examiner .*..~~.0.*.....0.***~.~.~~.~.~~~~~* ~9~~~~~ .~.e.o~eoO~eo . . . . **.0.00..~*0...~e. Examiner , 0 g: Bldg. and Loan and Loan and Brokerage and 1,aoo.oo

Credit Union Legal Adviser (part-time) o *. 33. Bldg. and Loan and Loan and Brokerage and

Credit Union travel and other items of contingent expense, including bona 4t,5OO.OQ premiums TOT& -- Building and Loan and Loan and $ 179750.00” Brokerage and Credit Union Division The appropriation for each fiscal year is identical.

If the appropriation under consideration came solely from the General Fund of theState unaffected by the source and of the fund or funds invo vea, i your questions would be easily answered, but this is not the case.

Section 1 of S.B. No. 42& in which is found the de- partmental appropriation under consideration declares:

IIT& the several sums of money herein specified or so much Lhereof as may be necessary, are hereby approprf- ated out of any moneys in treasury, not otherwise appropriated in the General Revenue Fund or special funds as may be shown for the support and maintenance of the sev- eral departments and agencies of the State government two-year period, beginning September 1, 1941, and end- ing &ugust 319 19430”

So that, lump sum of $17,750.00 appropriated the purposes enumerated in the division under consideration has been, perforce of the terms of the Senate Bill it self 9 appro- priated from the General Fund or from special funds as the per- manent statutes may provide with respect to the three @lasses of corporations embraced the division.

Section 9 of the Building and Loan Associations Act (Ver.Civ.Stat.Art. 88la) authorizes the Banking Commissioner collect certain fees from building and loan associations lieu of examination fees, expressly providing the assess- ment by the Banking Commissioner shall be for enough

9.o carry out the provisions of this Act; and said fees when collected shall be placed in a separate fund with State Treasurer to be expended during the current year, or so much thereof as may be necessary in carrying out provisions of this Act; and should there be an unexpended balance at the end of the year, the Banking Commissioner of Texas shall so that reduce the assessment for the succeeding year,

the amount produced and paid treas- ury, together with said unexpended balance in the treasury, will not exceed the amount appropriated for the current year, to pay all necessary expenses of supervising the op- eration and examining the business of the associations do- ing business under the provisions of this Act, which funds shall be paid out upon requisition made out and filed by the Banking Commissioner of Texas, when the Comptroller shall issue warrants therefor”

The Loan and Brokerage Companies Act (Ver.Civ.Stat., Art. 1524a) provides for fees to be paid by such companies, as foll.ows:

“Said corporation shall pay the actual traveling ex- penses, hotel bills, and all other actual expense incident to such examination and a fee not exceeding one-eighth of (Sec.2)*** one per cent of its actual paid-in capital. and (such companies as have sold in Texas or other obligations{ their bonds, certificates, debentures, or notes, are offering for sale in Texas their bonds, notes, certi- ficates, debentures p or other obligations) shall file a copy of such statement with the Banking Commissioner of together with a fee of Ten ($10.00) Dollars fil- Texas, (Sec.4)*** The corporation pay a fee of Fifteen ing . ($15.00) Dollars filing each such statement.” (Sec. 7)

The statute does not direct the disposition to be made by the Banking Commissioner of these examinations and statement Impliedly, they are to be paid by him into the General fees. Fund of the State treasury.

H.B. No. 845 of theRegular Session of the 47th Legis- amending Article 2465 of the Revised Civil Statutes of lature, Texas, 1925, and the amendments thereof, relating to credit Un- ions, declares with respect these as follows:

“The Banking Commissioner shall cause each credit union to be examined at least once yearly, such examina- tion to be made by (1) some competent person or persons designated by the Banking Commissioner who shall be paid by the Banking Commissioner an amount not to exceed ninety (90) per cent of the fees as herein provided, which said fees shall be paid to said banking commissioner by the re- spective unions examined as provided by this Act as com- pensation for his or their services and as reimbursement for travel expenses and other expenses incurred; (2) by one or more credit union examiners who shall be appointed by the Banking Commissioner not exceeding Three Hundred Dollars and shall receive a salary of

($300000) per month, and shall be reimbursed travel expenses in the sum of Four Dollars ($4.00) per day, plus cost of transportation, such examiners to retain their salary and expenses as above provided out of fees collected by them as hereinafter pro- vided; (3) or by the Deputy Commissioner, Departmental Examiner, assistant bank examiner, any bank examiner, building and loan supervisor or building and loan examiner, who shall receive and retain fees collected by them as such fees so collected to be cred- hereinafter provided, ited on the salary of the person collecting the same, so that excess of his such person shall in no event receive compensation

salary as provided by law. “Each credit union examined shall pay an examination fee fixed by the Banking Commissioner not to exceed Twenty- five Dollars ($25.00) per day per person engaged upon such examination.

“All fees as above provided shall be paid by the cred- ,it union to the person or persons making the examination, and such persons shall make a monthly account the Bank- ,ing Commissioner of the fees so collected during the pre- ceding month, fees in excess of those retained by the ex- ,aminer as above provided be paid to the Banking Com- missioner and by him deposited with the State Treasurer be held in a special fund and used for the purpose of en- forcing the provisions of this law.”

It will therefore be seen those fees paid by building and loan associations go into a separate fund with those fees paid by loan and brokerage companies State Treasurer; are to be paid the General Fund of the State Treasury; while a comparatively are small portion of the fees paid by credit unions

to be paid into a special fund with the State Treasurer*

“The “separate fund” paid by the building and loan as- and the Rtspeciallt fund paid by the credit unions are sociations to be used the express of expenses in adminiStering laws governing these respective corporations.

A rider attached to the appropriation for Banking Department declares:

l’Subject to the limitations hereinafter provided, there is appropriated to the Banking Department an amount equal partment to the total fees and revenues collected by said de- ending August 31, 19439 plus

during the biennium an amount equal the total fees and revenues collected by ending August 31, 1943, said department during the biennium plus an amount equal the fees and revenue collected b ending August 31e i: 19 1, said Department during the biennium in excess of the expenditures of said Department during sald~biennium, and the Department shall limit its expendi- tures to such amounts, provided said Department shall n,ot, in any event, anything in this bill the contrary n,otwithstanding, spend more during the biennium than total itemized appropriations for said biennium; further, provided if during first year of the biennium said Department shall spend less than total itemized appro- priation be expendable for said year, then said unexpended balance shall

during the second year of the biennium for of enforcing laws of this State for which said Department is charged with responsibility of enforcement, a.nd further providing that not more than seventy-five per c,ent (75%) of the appropriation the Building and Loan- Loan and Brokerage-Credit tinion Division shall be payable out of the special account created and maintained by the collection of fees by the Banking Department under and pur- suant to the Building and Loan Laws of this State, I(

The construction of this rider necessarily enters any consideration of the answers to your questions*

This rider pertains to the entire appropriation the Banking Department 9 which appropriation includes, of courses not only hereinbefore discussed but lfkewise first division--that of State banking corporations. 362 of the Revised Civil Statutes

Now, article declares: “Except as to savings banks, the expense of every gen- eral and special examination shall be paid by the corpora- tion examined in such amount as the Commissioner cer- and assessments therefor tify to be just and reasonable, shall fn proportion be made by the Commissioner upon the banks examined

to assets or resources held by the bank upon the da,tes of the examination of the various banks,‘”

Article 363, governing the disposition of such fees, declares:

“All sums collected as examination fees shall be paid by the Commissioner directly to treasury to the credit of the General Revenue Fund. Expenses of examina- tion and of the Commissioner in enforcing the provisions of this title be paid upon the certificate of the Com- missioner by warrant of the Comptroller upon the State treas- ury. It

It is the rule that an appropriation act canc;;itka;e the effect to repeal, amend or modify a general law. 57 Tex. 203; Linden v. Finley, ~92 Tex. 451; Attorney

Steele, l General’s Opinion 1916-1918, p0 110; Attorney General’s Opinion No. 2965 1934-1936, p. 46; Attorney General’s Opinion No, 2970, 1934-193&, PO 72; attorney General’s Opinion No. O-18,37).

Since the Building and Loan &isociations Act specifi- cally limits the purpose for which the “separate fund” under that iict has been accumulated to the express of enforcing the law governing such &asociation, and since H.B, No. 845 restricts the use of the 8’special ‘I fund created by fees from credit unions to the purpose of enforcing the provision of the Credit Unions rict, the Legislature is powerless by its Appropriation Act 9 to divert such funds from the respective purposes for which they were solely destined by statute to another purpose. (See O-2641, copy herewith).

You are therefore respectfully advised that since Legislature has no authority to allocate these special or separ- ate funds to any other use or p’urpose than the use or purpose which they were created, it follows that you, as Bankin,g Commis-- sioner, have no such power. No allocation of the appropriation can be made in such manner as to violate respective statutes creating these special funds.

It does not follow from what we have said, however, that the Banking Commissioner has no discretion or authority to allocate to an extent lump-sum appropriation of $179750.00 to of the department under consideration. The con- text of this appropriation, and especially when construed in the light of the rider above quoted, indicates clearly the Leg- islature intended the Banking Commissioner should have power to allocate this lump-sum appropriation the purposes of supervising respective corporations mentioned insofar as it (the Legislature) had authority ,>rovide for allocatfon.

We think the Banking Commissioner would have authority the exercise of his sound official discretion to allocate lump-sum appropriation in any way and to any extent that does not violate the statutes hereinabove quoted and discussed, requirin,g the use of separate funds and special funds therein mentioned ,to be devoted solely the statutory purposes for which they were created.

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Hon. 3. T. McMillan,

It may be thus said, by way of illustration, of Items 29, 30, 31, 32 and 33 comprehending salaries for supervisor, ex- aminers, and legal adviser 9 and travel and contingent expenses where the service or travel and contingent expense are with re- spect to two or more of the corporations being considered in ac- cordance with the equi,ties of the situation; that is to say, reasonable pro rata share of such salaries or expenses to be paid. No scientific basis or statutory basis whatsoever can be given for such allocation. The whole matter rests in a fair exercise of the sound official discretion of the Banking Commissioner in light of all facts surrounding the matter. His discre- tion when fairly exercised under the circumstances would be con- elusive, even upon the courts. The courts would have no authority to re.vise such discretion thus lodged in the Banking Commission- er in the absence of fraud, arbitrariness or lack of fact basis reasonably necessary to support his conclusions.

This discretion of the Commissioner may, we think, be exercised again and as often as the necessities require to effeet We are also inclined the view, and so ad- a re-allocation. vise you, that the exercise of this discretion in the matter of allocating the appropriation salaries, the Commissioner would, be justified in considering the contingencies known and un- known of the seasonal fees entering fund or funds.

The allocation made by the Commissioner in the manner we have suggested with respect items of salaries supervisor, the examiners ,, and the attorney should not, we think, be afr‘ected by the known fact in very truth it may happen such officers for a given month may actually be engaged Sn on,e only, or two only of the group of cor- activities concerning porations with respect to which his salary has been appropriated. A salary payment is not legally contingent upon the officer’s See Spears v. Shep- actual discharging his official duties anew. pard, 150 S.W.(2) 769,

Just what extra requirements will be made of the depart- +,nd thus what additional re- ment with respect to bookkeeping, quirements will be made in the ma:;ter of travel and expense ac- coun:;s will be required, we can not say, Much of the information upon which the Commissioner could and would act in allocating be known to him. We refer such appropriation would of necessity especially the character and extent of the services performed But, whatever exami.ners and legal adviser. by the supervisor, requirements and the like, may be the additionally irn-posed duties, *8 page 8 we know of no other way to properly inter- upon the department, Act, and to advise with respeet its pret the Hppropriation practical application.

Very truly yours, ATTORNEY GENERAL OF TEXAS By /s/ Ocle Speer Ocie Speer, Assistant APPROVED SEP 23, 1941

/s/ Gerald C. Mann

ATTORNEY GENERAL OF TEXAS

APPROVED: OPINION COMMITTEE

BY: BWB, CHAIRMAN

OS-MR:wb