OFFICE OF THE AITORNEY GENERAL OF TEXAS 

AUSTIN 

‘cnorable Yverrtt R. Cain 

bcunty ?ttornry, Chambers County 

inehuao, TOXOS 

-‘ear Mr. Csln: oplnlon No. O-7045 

Rer -%ea the Chambers-Liberty 

Counties Nerlgqaibn Cistrlot 

hare the authokitf to finrnoe 

end oonatruot 4 belt railroad 

imately hwlre milda to X088 

a1 21 ‘trik*aAqrall )&~&or the development bf the lower 

eo Son of’,the 

a&d Gq,loest~ \ 

Trlnltg 3lrtr and a part of Trinity Bay 

3 y for navigation purpoaea. It Is also 

a neae 

tcrfito \

aar,y/par,t of the iIiatriot*a plan to develop the 

y’elong the river and on the bayshore ior induetr$al and oomsrolal purposes. The road will rirst 

be use&.&marilg to haul sulohur from a new nulphur 

mine being developed et Z’oae huff, but it 14 antiolpet4d 

that rioe, oattls end patroleum produota in the are4 will 

also be transported to oonnaot with the routhorn ?eoillo 

Lines at Liberty. 

"The Fsdsral ‘:‘or!cs :.genog has requested the Slstrlot 

to 44our4 an opinion from you 4a to the Slstrtot’s legal 

authority to finanoe snd oonatruot this belt railroad. 

.i copy or the ?ederal :':or&4 .igonay9s letter is attachsd. 
::on. .verett H. Cain - ?aeo 2 

"The Dietriot wsa orgnnlzod under Artlolea 826jh, 8247a 

?nd 52476 of Vernon's imnotatod Tex44 %atutea, snd ths 

sreatlon or the Xatriot has heretofore born approved by 

your Zeoartmont in OOMOOtiOn with the 144UOnO4 of 5100,000 

:levlqatlon Aid 3ondr early In 1945. 

"The iYlstrlot la apooliloally authorized by Qotlon 1 

31 .!rtlolo 8247s to aoqulro, purohaae, oonetruot and opsrato 

1 . ..belt railroads...., and everything appurtenant thereto, 

together with 411 othsr feoilitler or alda lnoldsnt to or 

ua4rul In th4 opsratlon or development of the Dlatrlot’s 

torts and waterways or in eld of navigation and oomnero~ 

thereon....' The Xstriot proposes to Issue revonuo bonds 

untisr that atatuto for the puf~$lfr of fln4nolng the oon- 

:truotlon or the belt line. 

The aooy oi the Pederal Yorks ;igenoy*s letter, which you statad 

'J'S ztceohed to your requoat, was never received by this oiiIo4. 

irtlale 82678, Vernon's Annotated Civil Statutes, provldos in 

72rt 69 follows: 

$9 "40 , 1. Any navicatlon dlatrlot heretofor organized 

or heraartier to bs organized undar any of the provlslons 

of the Constitution or laws of the Ptate of Texas, In 

addition to all other powers aonferred by law is hereby 

!:lven authority and shell hereafter ham powor in ths 

nonner heroinafter provided to aoqulro, purchase, oonatruot, 

enlarge, ortend, rspolr, maintain, operato or develop whorvca, 

dooks, warehouses, grain elevators, bunkering faollltles, be 

dlroada, floating plants, and iaollltle.4, lightorlng ieollit 3 4s 

and towing faolllti4s, and everything appurtenant thereto, together with all other taollitles or aide Incident to or uaerul 

In the operatloa or development oi the dlatrlot*a ports and 

watsrwaya or In aid of navigation and oommros thereon. 

Toa. 3. The Eoard of Naviaation and Canal Commissioners 

of 9 such nav~tiondl~r~ct Ica 

sderalxrqenoy Administretion -4 om .bor s or the 

hors T from the 

'.'nlted Ctetea, or from any clthor department or agenoy oi the 

Znlted :?tates. or from any other scuroo, end In evidence thereof 

forma of obligation or suoh 21strSot rayat -- 

revenues to bs derfvxiron shad introvenen%a ant rao111cle 

for the nEpos4 of obtamqmds to acculr4.,purchaae. CC --. -L meinGi5iY Gorate 0: 

issue the notes, werrants, certifloates z indebtedness or other 

)lf, sol+g out of the TT.R - 

5 

jnstruct, 

enlarge, extecd, repair, 

decks, warehounes, grain elevetol 

r?il;'oads, floatlnq clants and fscl~ltlea 

i:-dbvelop wharves, 

:i, bunkorinG faollitlss, belt 

', li&terlnq faoiT3Xoa, 
205 

Uon. herott H. caln - paer 3 

towine, faoilitias, and everything SppUrtSASAt thereto, 

i,oq.thbr with 811 other f8OiUti48 or 8id8 IAOidOAt to 

or usaiul IA th4 oparatiOA or d4valopmeAt of the dlstrict'a port8 and watorwayr or in aid of AaligatioA 

RAd OOmmb?O. thor.iA. 

"Ceo. 4. Zaoh iasu8 of obligntiona authorized 

hereunder Shall OOAStItUtO 4 SbpSrCitb aoriee SAd shall 

be ap~roprlataly designated. C.‘uoh obligations ohaU not 

OOA3tItUt8 .A IAdebt8dn888 or pl8Qe of the oredlt of 

suoh dietriot, sh8l.l A4Par be paid in whole or in part 

out ot any fund8 rafsad or to be raioad by taxation, 

and shall oontain 8 rroital to thet offrot.* 

““40. 5. nA)f OblI@3tIOA8 iSSue& h4reuAd4r may be 

issued gayable from snd 84our4d bl the pledge of all the 

rev4nu48 dsrirrd from the ooeretloA of the lmprotea4nte 

cad isoilftIe8 of the distriot, aroluaite of any mvenuo8 

dorived from taxation or aaa48amaAta, or may bo payable 

from and aaoured by the plodgo of only l uoh r4v4nuea se 

my be derived from t&4 OporatfoA Oi the imprOvemeAts and 

faoilltlea aoquIr4d with the proo44dr of the sale of suoh 

OblIqStiOAa, Or mm7 ba payable Sr081 SAd 8eOured by the 

pledge of a soboifled part of thr relcnuea derived from 

the OperatiOA Oi th8 lJQrOt4BI4AtS 4Ad faOilfti88 Of th4 

dlatrlot, all as my be iworldad in the proowcll~gr 

authoriziAg the iSSUSAO4 Of auoh tbll@tiOA8. 

vao.17. 'Phi8 Plot shall bS OOA8trusd 88 oU&tiatito 

authority for the ~OOO!S~lfSblllSAt Of the ~lirpOSS8 heroin 

m4AtiOAad Snd I8 AOt t0 bS Oonrtrusd t0 :894ai SAP 4ti9Jtfng law8 011 the 8a1na aubjsot matter, it b4iAg thr purpose 

SAd b:bnt hereot to orest4 SA addltimal and 8lt4rA8tO 

method for +h4 SOOOIII~118hlSSAt Of8UOh 9WQO848. 'Phi8 

Aot, without rsfsranob to other statute8 of the State of 

Tame, ah811 OOAStitUtO full authority ror th4 euthorlmtiOA SAd faauaAO@ Of OblIgatIoAa herounder SAd iOr the 

aocomplIahmeAt of all thIAgs herein authorized to be doAb, 

SAd no QrooesdIAg8 r4latIAg t0 th4 SuthorIzetIoA Or 

IsSusAO4 of aueh obligatfOA or the dOIAg of auah thing8 

shall b4 A4oeaaary sxoept 8UOh aa are hsrrln required, 

sAd AaIthOr the Bond and :'iSrraAt LOW Of 1931 or OAY othsr 

provisions or the laws of the Stat0 Of TSXS8 PertiAOAt 

to the authorization or 18sua~04 oi obligations, thr 

OperatioA end meiAtenaAo4 of ports, 0aASl.a and water wsg, 

tb4 granting offraAohIs48 or permits, the right t0 eleOtion8 

or r4f4raAdum petitions, or In aAywis8 Impeding Or r4atrIOtjog the oarrylaq out of tha sot8 authorized to be done 

hereunder or sots done pUrSU4At thereto.***” 
:?OA. :yerett H. coin - Taga 4 

"4 nota that Art1018 82670 euthorlzea AaVigatfm dlatrlota to 

5aoulra , purchase, and oonstruot oortaln taollltlea without tsxation and to aoouro funds for auoh purpoeo by the lasuanoa of 

obllqetlona oi the dlatrlot payable rolsly from th4 ravenuoa to 

be derived from th4 improvamanta and faoilitira of auoh dietriot. 

"'a al80 note that the Sot do48 AOt sp4oi?ioally authorize the 

issusnoe of the bonds. It is well aottlad iA thir "tat. that 

countlea, mu~loipal oorporatlona, and pOlftfO@l aubdlviaioA8 

03MOt lSSU4 nsgotiablr bond8 urile88 8uoh power i8 expr6aaly @Onierred by law. Mere power to borrow money oarrlea wlth it no 

suthorlty to ia8ua negotiabla bond8 therefor. 34 Texas Jurl8- 

nrudence 6390 

217 --!. ';'* 37h 

Robertson v. Rreedloro, 61 T8xsa 3161 Laaater v, Lopez, 

:!owevar, we do not believe that tho type obllgstlon authorlzgd 

here iS a nagotiabla fAatrUQ4At. !74 quota from Jon68 011 *Bonds and 

?OAd ~4O~ftfOS", vol. 1, ~4OtiOA 289, peg4 302: 

nZl~oS the status or muniolpal bands as nogbtiebl4 

seouritiaa 1s to bs datermiAad by the provlalona OS the 

1:Aiiorm Megotlable Inrrtrumanta Law, it follows, as of 

course, that they must oontain the eoaeAtiela daelgnated 

by thet law, OAd sinoe the UAiiOrEI aot 18 but, iA the 

seln, a oodifioatlAn of the law QerohaAt, Suoh bond8 must 

therefore oontain the aaa4Atlal8 Of 8 A4gOtiSbl8 instrument 

as understood at oommon law. This lnoludea en uAooAditional 

promlao to pay a sum oertsln in money. If they are made 

payable only upon a oontkigenoy whloh may A4var ooour, S 

oondltion 18 thereby ln~ootad fAt0 tha prOmi88, making 

tha ultimate paymsnt problematloal, thur d4atroyiAg the 

uAoonditloAa1 oharaotor of the agreemoAt to pay at all 

events, SAd, at the Sam8 time, daatroyiAg the Aagotiability 

of ths lnatrumanta. Tuoh a altuatloA is damonqtrated where 

the bonds err made payable 8olely out of a apaoial iUAd to be 

derived from da8ignSt6d aouroaa~ which l ouroas may dry up 

before they hero yielded th4 prooeadr nooessary to liquidate 

their amount in rull. Hero the prepondsranoa of judiolal 

thought ha8 arrived at the oonoluaion that auoh aA arranngem4At, 

though oreating a probSblllty that the promlsod paymant 

will be made in full, still leavea a poealblllty that it may 

not be, aAd this poaalblllty 16aV4a the 9rOQiS4 itB4lf UAcertain and, therefore, not UAaOAditiOnel~ The Aejiotirbflity 

of such bonds la not Saved by the faot that they are made 

payable to bearer." 
Hon. 7veratt Ha Cain - Pago 5 

207 

IA view of the SOrSgolAg, you are advised that ln our 

oolnlon the Chambora-Liberty Countle8 N8vlgatloA Dlatiiot 

hss authority under Artlols 82470 to issue obllgtloAo oalled 

-ravonuo bond8" for the puxpoao 0s ffA8AOfAg the oonatruatlon 

o? a bolt railroad. 

'2uatlng this snmwera your ~u4atlona, we art) 

Very truly yours, 

ATTOFGYOENERAL CF ?EXX3 

3T: