Untitled Texas Attorney General Opinion ( 1939 )

A
Opinionconstruingand~holding:
1. That a commissionerscourt,doesnot have the authorityto
enter into an agrementeitherin or out of court to acoept
refundingbonds bearinga lower rate of interestin lieu
of bonds held in the PermanentSchool B&d of the county.
2. That a commissioners'court-doesnot hare the authorityto
enter into an agremsnteitherin or out of aourt to acaept
a discountof past due interestaocruedon bonds held in
the PermanentSchoolFund of the county.
July 14, 1939
HonorableE. A. I'Wxon
GountyAttorney
Crosbycounty
Crosbyton,Texas
Dear Sir1 Opinioa hb. O-909
Rer 'duthorityof a Ccmmissioners' Court
to enter into an agrementeither in or
out of court'toacaept refundingbonds
bearing8.lower rate of interestin lieu
of bonds held in the permanentschool
fund of the county;and toaccepta dis-
count of past due interestaocruedthere-
on.
flehave your letter~ofMay 30, 1939, requestingour opinionin
answer to t‘3 followingquestions8
1. Can the Commissioners' Court legallyenter into an
agwrmenteitherin or.out of the FederalDistrict
Court to acceptrefundingbonds bearing 3% interest
in lieu of bonds now held?
2. Can the Cormnissioners'Court legallyenter into any
agreementeitherin or out of the FederalDistrict
Court to accept 606 on the dollarfor all past due
coupons,includingthe ooupons'dueJanuary1, 1939,
and July 1, 1939)
A: 4
f
I
Hon. E. A. Watson,Page 2 (O-908)
The faots underlyingyour quelstionssre briefly as follonsr
The permanentschoolfund of Crosby County owns #15,000.00City of Book-
er, Texas, Bonda,~which were acquiredas an investmentfor such fund pur-
suantto Section6, ArticleVII, of the Constitution, and Article 2824 of
the RevisedCivil Statutesof19261 that the bonds bear interestat the
rate of 5-l/2 per cent per annlpp:
that the interestdue on said bonds is
from four to six years' delinquent,and that $2,OCC.O0of the principal
is likewisein default. Further,that suit thereonhas been filed in
Federal Courtat Amarilloin an effortto collsctsuch past due secti-
ties. This action has been taken in behalfof Crosby Countyand other
creditorsof the City of Bookerwho also hold maturedand unpaid items
of indebtedness.Further,the valuationsof the City of Bookerhave
been decreasedby more than 5% sincethe indebtedness vms created. Bow,
by way of adjustment,the City of Booker is proposingto issue refunding
bonds bearingintsisstet the rata of S$',and to liquidatethe past due
interestat fifty centson the dollar.
The laws of Texas pertainingto the inveshnentof permanent
schoolfunds imposea trust upon the countiesto safeguardthese funds,
snd only permitthe use of the earningsthersframfor the operationof the
sohools;they likeqiessprescribethe type of investmentsthat can be made
with said funds.
With respectto lands grantedthe various countiesfor aduca-
tional purposes,Section7, Article VI, of the Constitution,
provides,in
part, that:
"Said lands and the proceedsthsrcof,when sold,
shall.beheld by said countiesalone &strust for the
benefitof the publio schoolstherein3said proceeds
to bs investedin bonds of the kited States,State of
Texas,or countiesin said State, or in such other se-
curitiesand under such restrictionsas may be prescrib-
ed by law; and the county shall be responsiblefor all
investmentssthe interestthereonand other revenue,
except the principal,shall be availablefunds."
Article2824 of the RevisedCivil Statutesof Taxas re-enacts
the above law, and authorizesthe investmentof such proaeedsin other
bonds not theretoforeauthorized. T,headditionalauthorization under th$s
Article includedbonds of cities,towns and villagesof this State.
Section55, Article III, of the Constitution,statesr
"The Legislatureshall have no power to re-
lease~orextinguish,or to authorieethe releasing
or extinguishing,in whole or in prt, the indetied-
ness, liabilityor obligationof any incorporation
or individual,to thie State, or tc any ccuntyor
othermunicipalcorporationtherein.'
Hon. E. A. Katson, Page S (o-909)
In our opinionthe foregoingla* bears directlyupon the
propositionpresentedby your questions,and we find adequateauthori-
ty thereforin the cases. See Delta Countyvs. Blackburn,23 S.W. 418;
Comanche Ccuntyvs. Burke,166 S.W. 4701 Rigginsvs. Post, 213 S.W. 600;
and City RationalBank vs. EastlandCounty,12 S.W. (2d) 662.
After carefulconsideration of the decisionsin the above
cited cases,and a study of the languageused,we have reachedthe con-
clusionthat the Cosssissioners' Court does not have the authoritytc
enter into any kind of an agreement,eitherin or out of court,to relin-
quish or releasethe obligorfrom a full performanceof his or its part
of a contract. In supportof this conclusionwequote from the case of
Bland,et al., vs. Orr, 39 S.E. 558, whereinChief JusticeGaines,speak-
ing for the SupremeCourt,said:
"It is sometimesto the interestof a creditor
to compoundhis claim,and countiesare no exception
to this rule. It would xeem,therefore,that author-
ity to receive,in satisfactionof a debt due a county,
somethingother than the full amount of money, ought
to have been given to some of 'its officersor agcntsJ
but it is clear,we think, that the Legislaturehas not
lodgedthe powerwith the Cmsmissioners' Courts,whether
purposelyor not xc need not inquire."
Further--
"Re have found nothingin the laws existingat the
time the presentConstitution was adoptedwhich empowered
the County Courtto ccmpounddebts due the county,or
which gave them any controlover such debts."
Wherefore,the twc questionssulmittedmustbe answeredin the
negative.
Yours very truly
ATTORHW GENERALOF TEXAS
By /s/Clarence E. Crowe
CEC:s:egw Clarence2. Crowe
Assistant
'Xi.6opinionhas been consideredin conference,
approved,and ordered recorded.
/s/W. F. Moore
APPROVED W.F. Eoore
Opinionr%mitc:oe First AssistantAttorney
By ?fR Ii- Chairman Beneral