Untitled Texas Attorney General Opinion ( 1942 )

Honorable Geo. H. Sheppard
State Comptroller of Pub,licAccounts
Austin, Texas
Opinion No. O-4824
Re: Should State Comptroller deliver
a $1500.00 warrant, payable to
Montgomery County, prior to Mont-
gomery County paying interest due
on past-due school bonds?
Dear Mr. Sheppard:
We have your letters, as well as the one from Mr.
Gaynor Kendall, investment counsel for the State Board of
Education, relative to the controversy that exists between
the State Board.of Education @ridthe Commissioners' Court
of Montgomery County.
The facts, as given by you, are that the Permanent
School Fund in 1940 purchased $1,500,000.00 of bonds issued
by Commissioners' Precinct No. 2, ofMontgomery County.
A. W. Snyder & Company filed suit against the State
Treasurer and the State Comptroller, in their individual ca-
pacities, to recover possession of these bonds, claiming that
the Permanent School find did not have any interest therein.
The Supreme Court of Texas held against Snyder &
Company on their claim.'
During the pendency of the Snyder suit the first
maturing bonds, as well as interest'coupons, matured and were
paid. When the second series of interest coupons, amounting
to $4x,712.50, became due, the county refused to pay same to
the State Treasurer, and claimed that it deposited same with
the District Clerk of Montgomery County, to be held by the
clerk, pending the outcome of the litigation. After the liti-
gation had terminated, Montgomery County paid to the State
Treasurer the principal of said interest, but refused to pay
any interest on the past-due interest. At the time the interest
was actually pard:.tothe State Treasurer there was past-due
Honorable Geo. H. Sheppard - page 2
interest on this interest, figured at six per cent per annum,
amounting to the total sum of $1610.19.
The State Treasurer is still holding these interest
coupons, and has refused to deliver same until the interest
on the past-due interest has been paid.
It further appears from your letters that at the
time the Permanent Sc~hoolFund purchased these bonds they
agreed to pay Montgomery County therefor principal, accrued
interest, and $1500.00 as a premium. The county at the time
accepted the warrants for the principal and interest for said
bonds, but refused to accept the $1500.00 premium warrant, on
the theory that it should have been for $16,500.00. The county
now requests that the $1500.00 premium warrant be delivered
to it, and that the Treasurer pay same.
We are further informed that the interest coupons at-
tached to the bonds in question have no provision for the pay-
ment of interest on past-due interest, the interest coupons be-
ing payable on a day certain, as named in each interest coupon.
Under the above state of facts, you ask the following
questions:
1. Whether the interest coupons should be released
before the interest on the delinquent lnterest‘is paid?
2. Whether the premium warrant for $1500.00 should
be delivered and paid to Montgomery County prior to the time
it pays the interest on the past-due interest?
3. Whether it is necessary for the State Comptroller,
under Article 1660, Revised Civil Statutes of 1925, to file a
formal claim with Montgomery County for the interest which is
claimed to be due on the past-due interest.
Article 2671, of the Revised Civil Statutes, provides
that if default be made in the payment of any interest due upon
bonds purchased by the Permanent School Fund, the State Board
;f Education may declare the principal of all unpaid bonds due:
. . .; and the payment of both such principal and interest
shall in all such cases be enforced in the manner provided by
law. . . .'
Honorable Geo. H. Sheppard - Page 3
Article 5079, of the Revised Civil Statutes, pro-
vides that when no speoified rate of interest is agreed upon
by the parties, the interest rate of six per cent per annum
shall be allowed on all written contracts from and after the
time when same became due and payable.
Article 4344-9, of the Revised Civil Statutes,
provides that the Comptroller shall keep and settle all ac-
counts, in which the State is interested, including all monies
received by the State from whatever source, and for whatever
purpose.
Article 4350, of the Revised Civil'Statutes, pro-
vides that no warrant shall be issued to any person indebted
to the State, or to his agent or assigns, until such debt is
paid.
Article 4378, of the Revised Civil'Statutes, pro-
vides that the State Treasurer shall be the custodian of all
bonds in which the school funds of the State have been in-
vested, and that he shall keep said bonds in his custody until
the same have been paid, and when the interest coupons on the
bonds are paid, he is required to properly separate them from
from the bonds and cancel same.
(1) In virtue of the above statutes, it is our
opinion that the interest coupons attached to the Montgomery
County Precinct No. 2 bonds should not be released or cancelled
until the interest on the past-due interest at six per cent per
annum has been paid from the time said interest became due
up and until the principal thereof was paid. Since there is
no rate of interest provided for in the interest coupons, they
bear the statutory rate of six per cent per annum from the time
they became due.
(2~) Since Montgomery County owes the interest on
the $43,712.50 past-due interest from the time it became due
until the time it was paid, the $1500.00 warrant should not
be delivered or paid until said interest account has been
paid. As stated above, Article 4350, of the Revised Civil
Statutes, provides specifically that no,warrant shall be issued
or paid to any one who is indebted to the State until said
indebtedness is paid.
(3) By the third question propounded, you ask whe-
ther it is necessary, under Article 1660, of the Revised Civil
Statutes, for the State Treasurer or ~Comptrollerto present a
.
Honorable Geo. H. Sheppard - page 4
claim to Montgomery County for the interest on the past-due
interest, and have same approved before the county can pay
same. In our opinion, Article 1660 has no application to a
claim of this character. The County Auditor has no control
over the matter, and his approval or disapproval would add
nothing thereto, nor subtract anything therefrom. The bonds
have been voted and issued, and the interest Is required to be
paid the same as the bonds. The law requires interest to be
.paid on all past-due interest until same is paid.
In Nacogdoches County v. Jinkins, 140 S.W.(2) 901,
the court held that it was not necessary for the County Clerk
to present his claim to the Auditor for approval prior to the
time he filed suit thereon, and used this language:
"(5) Furthermore, it is not believed that
the claim here involved is such as is required
by Article 1660, ,R.C.S., to be presented to the
County Auditor for his approval, before same can
be presented to the Commissioners1 Court for its
approval and payment. (The opinion then quotes
Article 1660).
"This Article must be considered and con-
strued in connection with the succeeding Article,
1661, passed as a part of the same Act. (The
opinion then copies Article 1661).
"A literal application of Article 1660
without reference to Article 1661 would require
the filing with the Auditor of claims of every
nature, but under Article 1661 it is readily
seen that the Auditor has no authority to audit
or approve a claim of the nature here involved.
It is evident that the claims which he is au-
thorized to audit and approve under Article
1661 are claims based upon contracts lawfully
made, and accounts for supplies and material
supplied and contracted for as required by law,
to which are attached the proper requisitions.
There are no provisions in the law which indi-
cate that the County Auditor is vested with any
authority to pass upon the merits of claims such
as here.
Appellee's claim being one which under no
circumstances could be approved by the County
Honorable Geo. H. Sheppard - page 5
Auditor, Article 1660 has no application to it.
Southern Surety,Co. v. McGuire, 275 S.W. 845,
writ ref.; Greer v. Hunt County, Tex.Com.Apps.
249 S.W. 831."
It is, therefore, our opinion that it is not ne-
cessary for either the State Treasurer or the Comptroller
to file a claim with the County Auditor or the Commissioners'
Court for the interest due on the past-due interest on the
bonds in question. The county should pay this in the same
way that it pays the interest and principal on said bonds.
Very truly yours,
ATTORNEY GENERAL OF TEXAS
BY Geo. W. Marcus
Assistant
GWB:mr:bt
Approved Sep.l8,1942
Grover Sellers
First Assisant
Attorney General
Approved Opinion Committee
R-yBWB, Chairman