## TEXE ATNBRNEY GENERAL OP TEXAS

Honorable J. w. Edgar Opinion No. M-304 Conxnissioner

of Education Texas. Education Agency Re: Legality of acceptance of 201 East 11th Street personal bond signedby ofAustin, Texas 78711 ficers or others of a bankcorporation in satisfaction of bond security requirement under Article 2832,V.C.S., Dear Dr. Edgar: and related questions.

Quoting from your letter requesting an opinion on the above statedmatter, we set out your first question as follows: "1. Where a bank-corporation,as distinguished from a person, pursuant to Article 2832 is selected by an independent school district as its depository (treasurer),legallymay the corporation tender and/or this Agency honor in satisfactionof the bond security requirement rsonal bond sig.ied by officers of that bank 'Zr*as sureties?"

._ By its terms, Article 2832,Vernon's Civil Statutes, uses lpersonland 'corporation"synonymously,inreference to a "treasurer"who is required to be secured by bond. .Thefirst paragraphprovides, in part.:

"Inany independentdistrict

. . . the treasurer of the school fund shall be that who offers satisfactory of interest on the:average daily balances or time deposits for the privilege of acting as such treasurer. The treasurerwhen thus selected shall serve-r a term of two (2)years and until his successor shall have been duly selected andqualified and he shall be required to give bond in an amount Gual to the estimated amount of the total receipts coming annually into his hands. when such bond is a personal bond;rovided, that

-1479-Hon. J. W. Edgar, page 2 M-304)

,. when a bond is executedby a surety company

**or** is a bond-other thana persona% bond, such bond shall be in an--amount equal,to.thehighest dai-iy'balance-for'the-~current-biennium, to be determined.bythe governingbody of **such** sdhool district

. . .' (Bmphasisadded.) The statutorybond thus provided **for** must **be** II

. . read, construed, and enforced in.connectionwith, Andy according to, the statutepursuant to which it is given, and to be interpreted according to the purpose. and meaning of the legislative enactment." 8 Am.Jur. 709; Bonds, Sec. 4.

As used above, "treasurer" includesboth persons and corporations,and.such,treasnrermay'give,.a~ "personalbond" in fulfillment.ofthe statutory.,.requirements. 'Thus;,~a~bank

officer may legally~givea personal.bond;--obligating either.

his own assets or those of the bank;insatiefaction of the bond requirements of Article 2032. The-provisions'of the statute contemplate the giving **of** such a "personalbond" as distinguished merely from one "otherthan personal," that is,~a "suretybond." Either type bond is a "satisfactorybond," provided given in an amount as.

plainly prescribedby'the statute. Using a different approach,.~what is meant by."personal bond* as it is used in Article 28321 The word *personalmmay include.eithera human individual or a corporation, a corporate entity being regarded as a person for legal purposes. 32 Words and Phrases, 307, 308, under *Person.*

A *bond*, in-thepresent context,means a sworn promise in writing that, upon the-failureof the'treasurerto fulfill the terms of the contract undertaken,. certain funds may be looked to **for** compensation~of-.,the schooldistrict for any **damage** caused by such failure,,of performance. 5A Words and Phrases, 121, under 'Bond." Therefore, a "personalbond," as used in Article 2832 is a sworn statement-inwriting by.a person (orpersons) representingeither himself or a corporationwhich he is authorized to **contract** for; that **promises** designated asset1 will **be** available to compensate the school district in question should the treasurer contractedwith fail to properly fulfill hi& duties. So, the same result foll~ows as above, that a bank office may legally execute a personal bond in favor of the school district to secure the proper performance **of** duties by the treasure1 of said school district.

your second question reads:

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"2.,What responsibility,if.any rests in this Agency to ascertain the,financialworth of the surety(ies) signinga personal bond?"
In reference to the bond-to,,be given, the second paragraph of Article 2832 reads.; in part, "It shall.be approved bv the school board.and the.State.Ueuartmentof Education .'.&all & notified of the' treasurer-bkthe president-of-the school board filing a copy of said bond in-said.department;"‘.(Emphasis added.) This language clearly.doesnot plaoe'any.reaponsibility on the Agency to ascertain the financialworth of the surety. As no other-mention is made of the Agency in Article 2832 it is clear that no.such duty is imposed.by the statute.

The third question you pose is:

- w. 3. Assuming queryNo. ~1~ is answered, Yes: Where pursuant to Article 27~86d, a.school diatrict investsproceeds realized from sale of school bonds in time deposits.of, its bankcorporation,.depository which.is covered only '. by a ersonal bondi.are such proceeds properly secur&rotected7"
To quote **from** the relevant-portionsof Article 27866, Vemon's.Civil Statutes:

. "From and after the.effective-dateof this

Act, any school districtwithin-the'statewhich has or may have on hand any-sums-ofmoney which are proceeds rece,ived from the isaue.and sale ~of bonds of.-anysuch school distriot'i'either before or after,the effectivedate of-this Act, which proceeds'are not immediatelyneeded,for the purposes for which such bonds were-issued and sold, may, upon order of the board of.trustees of such school district, place the proceeds **of** such bonds on interest~bearingtime deposit;secured in the manner provided in Article 2832;Revised Civil Statutes.with a state or national bankina corporationwithin this state; or invest <he proqeeds of such bonds in bondsof.the United Statesof America or in other.obligationsof the United States z America, as may be determined by the board of trustees of the school district;

. . . ." (Emphasisadded.)

-1481:Hon. J. W. Edgar, page 4 (R-304)

The article clearlyprovides for three alternative methods of securing such deposits; one of such alternatives being the method discussed in regard to.,-your first question, infra. Therefore;;yourthird question-is answered in the affirmative;.suchdepositsmay be.secured by a personal bond. SUMt4ARY
A bond signedby a bank officer, or other persons so authorized, either as an individual or authorized agent oftthe bank, may legally satisfy the security,requirementof a personal bond under Article 2832,V.C.S. No duty evolves upon the Texas EducationAgency to ascertain the financialworth of the surety on such bond, and such bond is; also, sufficient to fulfill the requirementsof security for funds deposited pursuant to Article 2786d,V.C.S. yc;zYtruly your8, 

# Qiz5E
C. ~Generalof Texas Prepared by Bill~Corbusier Assistant Attorney General
APPROVED: OPINION COMMITTEE Hawthorne Phillips, Chairman Kerns Taylor, Co-Chairman Robert Crouch Sam Xelley l4alcol.m

Quick Soott Garriaon John Fainter A. J. CARUBBI, JR. Executive Assistant

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