TEE A'LTORNJYGENE~RAL 

OFTEXAS 

Honorable 0. P. Lockhart, Chairman 

Board of Insurance Commissioners 

Austin, Texas 

Dear Sir: Opinion No. O-4373 '.~ 

Re: May a stock casualty company Sncorporated and licensed in Texas 

under Ch. 18, Title '78, 'invest 

its surplus funds in bonds -issued 

by a road district of a Texas 

county under the provisions of 

Article 4706, Subsection (c)? 

Your letter requesting the opinion of this department 

on the above stated question reads as follows: 

"Please advisewhether a stock casualty 

company, Incorporated and licensed in Texas 

under Chapter 18, Title 78 .mag, under the provisions of Article 4706 subsection (c) Invest 

its surplus funds'in bonds lssuea by a road 

district of a Texas County. 

"We are of'~the opinion that the question 

should be ansvered In-the negative. -The'com-' 

pany involved argues to the contrary; however, 

upon the contention that road districts are portlons of counties, and that, therefore, road 

district bonds should be construed to be county 

bonds and as such eligible for investment. We 

have stated our views that the test of eligl-. 

blllty is not that of territorial coincidence, 

but one of Identity vel non of legal entitles. 

It seems to us that a road district is a totally different legal entity from that of a county 

or countles in which the road district's territory may lie, and hence in no proper sense is 

a road district bona a county bond within the 

meaning of the statute cited. Please advise 

if we are correct in this view." 

Article 4706, Vernon's Annotated Civil Statutes, provides in part: 
Honorable 0. P. Lockhart, page 2 O-4373 

"No company, except any-.writing Life, 

Health, and Accident Insurance, organized 

under the provlslons of this Chapter shall 

invest its funds over and above its paid-up 

capital stock In any other manner than as 

follows: 

. . . . 

"(c) In bonds or other Interest-bearing 

evidence of indebtedness of any county, Incorporated city, town, or school or sanitary 

or navigation district, such navigation district to contain a population of not les.sthan 

three hundred and fifty-nine thousand (359,000) 

according to the last preceding Federal Census, 

in this or any other State in which said company may be duly licensed to conduct an lnsurante business, if such evidences of indebtedness are issued by authority of law and if 

interest upon them has never been defaulted. 

Article 752a, Vernon's Annotated Civil Statutes, authorizes any county or any political subdivision of a county, or 

any road district that has been or may hereafter be created by 

any general or special law to Issue bonds forthe purpose of 

construction, maintenance and operation of macadamlzed, gravel 

or paved roads and turnpikes, or Ln aFa thereof, in any amount 

not to exceed one-fourth of the assessed valuation of the real 

property of such county or political subdivision or road dis' 

trlct, and to levy and collect ad valorem taxes to pay the Interest on such bonds'and provide a sinking fund for the redemption thereof. Said statute specifically provides that: 

11 . . . . The term 'political subdivision' 

as used in this Act, shall be construed to mean 

any commlssloners~precinct or any justice precinct of a count%, now or hereafter to be created 

and established. 

Article 778a, Vernon's Annotated Civil Statutes,-authorizes any number of adjoining counties within this State, parsuant to authority conferred to Section 52 of Article 3 of the 

Constitution, to issue bonds not exceeding one-fourth of the 

assessed valuation of the real property of the territory lneluded within such counties, and to levy and collect annually 

ad valorem taxes to pay the interest upon such bonds and to 

provide a sinking fund for the redemption thereof, for the same 
Honorable 0. P. Lockhart, page 3 o-4373 

purposes mentioned in Article 752a,~'supra. -When such b'onds 

are issued'by virtue of Article 752a, supra, when issued for 

and on the faith and credit of political subdivisions or 

road district, such taxes shall be assessed and collected in 

the same manner as is now provided by law for the assessment 

and-collection of common school district taxes. 

752m, Vernon 9 Annotated Civil Statutes) 

(Article 

With reference to classification of county bonds,' 

Article 752s, Vernon's Annotated Civil Statutes, provides: 

"When the road bonds have been Issued by " 

a county as a whole, such bonds shall be known 

and designated as I County Road Bonds', 

taking the name of the county issuing the same, 

and shall express on their face that they are 

issued, under authority of Sectlon52, of Artlde 3, of the Constitution of Texas, and laws 

enacted pursuant thereto." 

With reference to classification of subdivision bonds, 

Article 75213 provides: 

"If the proposition to issue the road bonds 

of a political subdivision or road district is 

adopted, such bonds shall express on their' face: 

The State of Texas, the' name of the ctinty, the 

number or corporate name of,the subdivision or 

district issuing such bonds, and they shall be 

designated as 'Road Bonds', and express on their 

face that they are issued under authority of 

Section 52, of Article 3, of the Constitution 

of Texas, and laws enacted pursuant thereto." 

In view of the foregoing statutes with reference to ~~. 

classificatlon.of bonds, the procedure to be followed in lssuing the same, etc., it is clear to us ~that a road district 

is a totally different legal entity from that of a c'ounty or 

counties in which the road district's territory may lie and'~ 

hence in no proper sense is a road.distr'ict bond a county bond 

within the meaning of Article 4706, supra. Therefore, we 

respectfuIly answer the above stated question in the negative. 

It will be noted that the Legislature, in subsection 

(c) of Article 4706, supra, specifically designated school or 

sanitary or navigation district but did not name or mention 

road districts. We believe that it was the intention of the 

Legislature to-exclude road district bonds from subsection (c) 

of Article 4706, and did exclude such bonds by not naming them 

therein. 
Honorable 0. P. Lockhart, page 4 o-4373 

. 

. Artlcle‘779;Vernon's Annotated Civil Statutes; as 

amended Acts.1941, 47th Leg;, p. 899, ch,. 552;sec: 1, the 

Commissioners4 Court'may invest sinking funds accumulated for 

the redemption and payment of any bonds issued by such county, 

political subaivlslon, road district or defined district thereof, in bonds of the United States, of Texas, or of any county 

in this State, or any school district or road district of 

this State, or any incorporated city or townof this State; 

or in bonds oPthe Federal'Farm Loan Bank System, or' in War 

Savings Certificates, and certificates of indebtedness lssued by the Secretary of the Treasurer of the United States. 

No such bonds shall be purchased which, according to their 

terms, mature at a date subsequent to the'time of maturity 

of the bonds for the payment of which such sinking fund was 

created. 

To us, the above mentioned statute illustrates that 

the Legislature does not consider road district bonds as county 

bonds, in the sense that county bonds are ordinarily understood and treated by law. But, road district bonds and county 

bonds generally are considered and treated as two distinct and 

separate types of bonds. 

Yours very truly 

ATTORNEYGENERAL OF TEXAS _. 

By s/Arde11.Williiiims 

Ardell~~Williams 

Assistant 

AW:GO:wc 

APPROVED FES 5, 1942 

s/Grover Sellers 

FIRST ASSISTANT 

ATTORREYGRWRRAL 

Approved Opinion Committee By s/MS Chairman