Untitled Texas Attorney General Opinion ( 1950 )

Q,P TEXAS
PRICE DANIEL
ATTORNEYGENERAL
Dr. J. W. Rdgm, Cossxissioaer
Texas Education Agency
Austin, ,Texas
Altteation: Bon. L. A, Woods
Opinion ma. v\r-zogo.
Re: Authority of Independ-
ent School District
Board tbroqh Its Treas-
ups&’to plaae bond pro-
Des3 Sir: tree&a 011 time deposit.
You have requested an opinion on the author-
ity of the CarrIea Spirings, Independent School District
ME”, to plaoc on time deposit money secured from bond
.
Information eontained In your request reflects
thati
The Union State Bank, Carrlza Springs, is the
tily qualified treasurer of the Independent School Dis-
trict. The dir&riot has properly voted, issued, and
so.ld bon& to obtain funds with whi,ah to purchase land
Andyconstruct school buildings, About $2OO,OOO.OCfrom
this bond sale will not be needed for an estimated pe-
riod +of six months due to title defects that must be
cured in some land nhieh the Board proposes to purchase,
This 1$200,000.00 1,s now on deposit with the Union State
Bamk which is the tre s rer for the Independent School
Dls~lct 9 The S&&m has requested the Bank in
it;s.%apacity as reasurer of school funds, to acce&
bhlij bond money * eposit in interest-bearing, non-
ehepklmg time deposit ;(reaoupts by virtue si* the Rank’s
bid to act, as treasurer. I%%18the Bank refused to do,
&%iele 2832, VeC..S., p%oovldes in part;
“fn any independent district of more
than v q 6 (150) scholastics, whether it be
in a city which has aS6UBIed oontrol of the
rchools wIthIn i&s lialt~, 06 a oorporation~
for mohool puppoles only, and whet;be# organ-
ized under general law OF cmated $P speoial
act, the treasurer of the school fuad ahall
be that pemon or corpopatlon who offer8 aa%-
Isfactory bond aod the bert bid oi ia&peLt~
on the avefage dal1.y baloaoer fop #e prlvi--
lege 0r acting ata 6uoB ~ea~wec~ 2he %mae-
urea wheu %&INselected shall sepve fop a
term 0S two year8 an8 until Ma 8p19oe``or
ehall have been duly relearted and guallfled
and he shall be Peguired to IPre botul in an
maount equal %o %he cstlmat et amount or the
drotal %ecelptr ~osalng annual1 IsLo Ma handr,
when rueh bond is a personal $ and; provided,
that when a bond la execut@tQby a rupety oom-
pan OF is a bond other than a peP&oaal bond,
au@ii bond shall be in ap.,amoun%spur1 to the
highest eatlmated daily balomr ior the our-
rent biennium to be detemlned @ ,the govern-
iw body Of SU& school dirtrictj 0 0 o
1, O Said bond ahall be payable to the
pmuldtkk of %he IboW aod~bis aucoeaaora 10
offloe, aonditloned Pop %he talebid. discharge
of %he %reawper’a dutlee and the payment of
the buodr pee&iweQ by hi* opom tie drsndt ,of
the preridea% of the mhool board dpav$ up@
oavler, duly entered of &he board of trustecr,
Said bond &all be &Jieb @oadltfonsd that
We tFearpl%ep 6hall aaiely keep and faithfully
diMxwre all Btmdmooalng Into his hands a8
Weaawe8, a@d ahall faithfully pay oveP to
hfa auocesaoy al; balamer remaining in hla
handa, 0 0”
Wnder timis A&icle the School Board hae author-
It to oelect a tpeaauper, and we find oo obgection to
UQs on State Bank ao&iug aa treasurer alnce $6~ request
states that the Bank haa aatiabled the Fequirements 0%
the Art;icsleO
The rule that prpoaeede oi bond sales must be
to tie puppose for wh.fgh the bondr weFe
i es$ab.blfshedO The Attorney Qene$al’a Of-
rice has written mmerous opinloams holding %ha%ie t&e
absence of express sta%u%oaFg authority bond proceed6 may
not be ueed for any pu??pose othef than that $0~ whulbich
the bonds wem iasuedd A “tfnae deposit” alglal%ier %&e
t’
,!:
i DrO J. W. Edgar, Page 3,,~ (V-lO!#O),
placing of money In an account from uhieh It can only be
withdrawn at the expiration of a apeclfled and deflalte~
period set out in %he deposld; agreement. The usual min-
imum period of a time deposit 1s thirty (30) days, and
the maximum period may be any agreed to by deposltor and
depository, so long as it j.s allowed by banking laws,
Thus i% differs from an open account which may be wlth-
drawn a% any time on demand of the depositor, We find
no statutory authority for bond proceeds of an lndepend-
ent school district to be placed In time deposits.
f
Hei%her do we flnd authority in the statutes
to allow %he school boaad OF Its treasurer to rellnqulsh
control of such bond proceeds at any time or for any pe-
riod 0 If the treasurep, at %he direction of the School
Board or for any other reason, submitted money from bond
i proceeds to a time deposit, such action would constitute
%he treasurer’s loss of control of such fmds, and a dl-
version of the bond pkoceedm by the treasurer from a
simple safekeepjng to a use o%her than that for which
the bonds were voted,
Although placing the funds In question In a
time deposit would no% constitute a “loan,” the Supreme
``5”~,``,~3%~,``9````,rnhv” Taylor, 81 Tex. 59, I6 SaWa
t e generra’f rule on use and con-
trol of proceeds from bond sales in the following lan-
guag e :
,z0 0 0 The oitg had power %o raise a
fund fop the constauctlon of water-works
under the limitations l.mposed by law, but
when such a fund was Pal.sed it could only
be used fop %he specific puppose, and be-
came j wfthlm the meaning of the law 9 a’ spe-
cial fund- If it could be loaned for a day
i% oouPd be loaned fop much longer period
as the cl%y au%hoz4%lee might see proper to
Ioan It, and %hus a special fund be raised
for a lawful p~pose, ,and used fop a pup-
pose essentlallg unlawful o It may be Fe-
plied that in %his case %he city, under %he
a.grPeement with the Pannln Goumty Bank, would
mot have 0eem bound %o leave the fund with
that batik fos any deflnl%e perlod If it need-
ed the money to une for Mae puPpose for which
i% was raised, bu% this does no% affect %he
law of %he case0 0 D The %peasuper might have
selec%ed the borrowing bank as a depositaxy
of the fund, but if, in p~suanos of an U.D-
lawful order, he had dellveP%d the fund to
that bank as a bora?ower, he and the sureties
on hls bond would have been liablh bar a mia-
app~op~iatlon of the fund, 0 D 0”
We believe the prfnelples expressed as to use
of funds dedicated to a speclflc purpose and 1086 of aon-
trol of such funds, apply to the raltuation presented Q
the desired action of the CarPplzo SprW$s School Boatid
Proceeds of the sale of bonds by an in-
dependent school distriot maa DONbe pl&Oed
on time deposit by the Wea~ura~ of the dlt+
trlot in the absence Of BpeOibiO @ta%utOF$
authoHtgV
APPROVEDS Youm osrp tml~
George We Spadct3 PRIQC DAlmL
Cb~%f, Bond DQvlslon Attornep tksleral
Everett Xut@hiaesoK~
Execu$fve Assistant
QRa~las I)* Mathews
Flrat Assslstam% r - Asslatant
I.
JSBlswbr;$B~e
.