Untitled Texas Attorney General Opinion ( 1942 )

Honorable John R. Shook
Criminal District Attorney
Bexar County
San Antonio, Texas
Dear Sir: Attention: L. J. Gittinger
Opinion Embar O-4746
Re: Can proceeds af the sales of
bonds issued under the provisims
of Chap. V., Title 71, R. C. S.
of Texas (Article 4478, et seq).
which cannot be used to build a
hospital on account of the war
emergency be invested in United
States War Bonds or in bonds of
the State of Texas or Bexar Comty?
We acknowledge receipt of your letter of July 28, 1942, wherein you ask
for an opinion on the following question:
"Can proceeds of the sales of bonds issued under the provisions
of Chap. V, Title 71, R. C. S. of Texas (Art. 4478, et. seq)
which cannot be used to build a hospital on account of the
war emergency be invested iu United States War Bonds or in
bonds of the State of Texas or Bexar County?"
It is a fundamental principle of law that the proceeds derived from the
sale of bonds must be devoted to the purpose for which the bonds were
issued, and not otherwise. Beaumont v. Matthew Cartwright Land Co.,
224 S.W. 589 (Erlor refused); Simpson v. City of Hacogdoches, 152
S.W. 858; Aransas County v. Coleman-Fulton Pasture Company, 191 S.W.
554; Lewis v. City of Fort Worth, Texas, 89 S. W. (26) 975.
The authority to invest public funds in their custody has been expressly
conferred upon the Commissioners' Courts by the Legislature in some
instances and by the Constitution in others. In each instance, where this
power is given, the character of the securities in which such moneys can
be invested has been carefully prescribed. In every case where the
Legislature has authorized investment of public funds, it has named bonds
of the United States Government among the securities in which such funds
may be invested, recognizing the obligations of the United States as the
safest of securities. If the power to invest the bond proceeds existed,
we could conceive of no safer investment.
Honorable John R. Shook, page #2 o-4746
However, we find no provision of law authorizing the Commissioners' Court,
or any other authority, to invest money derived from the sale of bonds.
Such an authority is not to be implied from the power to manage the affairs
of the county. The Supreme Court of Texas, in the case of City of Bonham
v. Taylor, 16 9. W. 555, held that the city had power to raise a fund for
the construction of waterworks under the limitations imposed by law, but
when such a fund was raised it could only be used for the specific
moose , and become, within the meaning of the law, a special fund, and
that the city had no authority to invest or loan money realized from the
sale of bonds.
We call your attention to the fact that the Legislature has provided for
the investment of surplus money in sinking funds of bond issues in certain
enumerated securities. If there is any surplus in the sinking fund of the
issue in question, this surplus may be invested in compliance with the
provisions of Article 779, as amended, Acts of 1941, Forty-seventh
Legislature, page 899, Chapter 552, Section 1, or Articles 836, 837 and
837a, Vernon's Annotated Civil Statutes.
You are, therefore, respectfully advi.sedthat in our opinion the proceeds
from the sale of bonds cannot be legally invested in United States War
Bonds or in bonds of the State of Texas or Rexar County.
Very truly yours
ATTORNFX GETERALOFTFZAS
S/ Claud 0. Boothman
By
Claud 0. Boothman
Assistant
COB-s/ldw
APPROVED AUG..4, 1942
s/ Gerald C. Mann
ATTORNEY G!3NkRALOFTRXAS
APPROVED OPINION COMMITTEE
BY B. W. B.
CHAIRMAN