%-HE A ORNEY 

May 5, 1950 

Hon. Theophilus 3. Painter, President 

The University of Texas 

Austin, Texas OpinionBo. V-1052. 

Re: The legality of invest-~ 

ing the Permanent University Fund in bonds 

of common and independent sohool districts 

Dear Sir: of Texas. 

We quote from your inquiry as follows: 

"The investments of the Permanent University Fund are made pursuant to the authority delegated to the Board of Regents by 

Artiole 259la, Vernon's Annotated Civil gtatutes of Texas, and by Section 11 of Article 

VII of the Constitutionof Texas, as amended. 

We would appreciate very much your opinion 

as to whether or not the term 'School Bonda 

of Munloipalitiesl in the oonstitution and 

statute8 inaludes the bonds of oommon and 

Independent school distriots of this State?" 

The Constitution of this State by Section 11 of 

Article VII, as amended, declares that the Permanent University Funds "shall be invested in bonds of the United 

States, the State of TexBs, or oounties of said State, or 

in Sohool Bonds of munioipalities, or in bonds of any city 

of this State, or in bonds issued under and by virtue of 

the Federal Farm Loan Aot . . an 

In oonformanoe with the oonstltutional provision, es amended, Article 25918 of Vernon's Civil Statutes was enacted. Section 1 of that statute provldea in 

part: 

"The Board of Regents of the University of Texas la authorieed to invest the 

Permanent Fund of the University of Texas 

inr 
Ron, Theophilus 3. Painter, page 2 (y-1052) 

Bonds of the State OS Texas; 

Bonds of the United States 5 

Bonds of countiea of the State of 

Texas; sohool bonds of munioipalities of the State of Texas; bonds 

of oities in the State of Texas;” 

Webster’s Rew International Dictionary, 2nd Rdition, defines “munioipality” to be: 

“A town, oity or other distriat having 

powers of local self-government; a munioipal 

oorporation; also, the oommunity under the 

jurisdiction of a munioipal government. 0 .’ 

In Love Y. City of Dallas, 120 Tex. 351, 40 S.W. 

2d 20 (1931) our Supreme Court, speaking on the nature, 

status and property rights of school dietriots OS Texas, 

said : 

“Sohool distriots are loo01 publlo oorporetiona OS the aame general oharaoter as 

munioipal 00 

So hool Dia t . “p 

orations. Thom aaon Y. Rlmo Ind. 

TeX&iv.App.) 2 % 9 S.W. 868,870; 

Royee Ind. Sohool Diat. Y. Reinherdt (Tex.Civ. 

App.) 159 S.W. 1010 (writ refused). They are 

defined as quasi-munioipel oo 

rp 

orations and 

:!;;a their powera by deleget on born the 

a They are state sgenoie8, erected end 

emplwed for the purpose OS edminiatering the 

state’s system of pub110 sohoola. 24 Ruling 

Case Law, pp- 562 to 565, a# 6 and 7 . e . 

Cities and towns and munioipal oorporations 

are OS the aama general nature as queei-munioipal corporetiona, in 80 far as here involved, and the right of the Legislature to oreate, 

abolish, enlarge or restriot them in their territory or powers la, unless restrained by apecial constitutional provisions, similar to the 

authority of the Legislature over quasi-munioipal corporations 0 Both are agenoies of the 

government - the one with a more limited sphere 

than the other . o .” 

And from Hatcher Y. State, 125 Tex. 84, 81 S.W. 

2d 499 (1935) we quote: 

” o e Sohool Diatriota, whether independeni or oommon sohool distriota, are not 
_. ‘. 

Hon. Theophilua S. Painter, page 3 (V-1052) 

primarily sgenaies of the state, but they 

are loo61 public corporations of the same 

generzl character as q unloipel corporations 

. . . 

Furthermore, school distriots of Texas, whether 

classified as common or independent, are by statute constituted bodies politic end corporate. Arts. 2748, 2780, 

V.C.S.; Hatcher Y. State, aupre. 

The authorities above quoted demonstrate that 

sohool districts of this State are munlclpalities, local 

public corporations, oreated by the State for the purpose 

of conducting In their localities the certain govertusentel educational functions delegated by the State. 

In our opinion, the phrase "sohool bonds of 

munlcipelltiesR as used in Section 11 of Artiole VII of 

the Constitution and Article 2591a should bs construed 

to include sohool bonds of common and independent school 

distriotsof Texas. Further, that the words "OS munioiPalitiea" were employed to restrict the investment o? 

permanent University Sunds (insofar asschool bonds are 

conoerned) to investments in public school bonds as distingulshed from bonds of private school corporations. 

It is important to note that the same provlsions in the Constitution end etetute considered herein 

further authorize investment of such funds "in bonds OS 

any city of thin state." The quoted phrase immedletely 

Sollows the language under oonsideretlon. School bonds 

of municipally controlled sohool diatriots are issued by 

the city. such bonds are city obligations, oity bonds. 

Poteet Y. Bridnea, 248 S.W. 415 (Tex.Civ.Agp. 1923); A.0. 

apinions v-334 V-690. Being city bonds, investment of 

permanent Unlvksity funds in same would olearly ba e+ 

thorlsed by the clause, "bonds of any olty of this &ate." 

IS it were the purpose of the Constitution with 

nspatt to investments In school bonda to rastrlat investments of said funds to Wore sohool bonds issued b;r 

munioipelly oontrolled school districts, swh intendwent 
Ron. Theophilus 3. Painter, page 4 (V-1052) 

.- . _ 

could and, we think, would have been aocompllshed simply 

by omission from the law o? that phrase ‘school bonds 

of municipelities,” and leaving ttarain only the phrase 

“bonds of 8~ oity of thf;s State. It Is oleer that “munioipellties end “city, as wad in the Constitution end 

statutes were intended to have dlfierent meaninga from 

om another. 

In construing the Constitution aid statutes, 

as we have, to euthotise investment o? permanent University funds in oommon and independent sohool district 

bonds, as well as in the muniolpelly oontrolled school 

district bonds, meaning Is given to the phrase “sohool 

bonds of munioipallties 0” Construed otherwire that 

phrase bw omes useless, having no meaning. Such a pnsumption should not be ascribed to the people who sdopted the amended oonstltutional provision, nor to the 

Degisleture in its enactment in sooordeuce therewith. 

Investments of the Permanent University 

Fund may be made in the bonds of common end 

Independent school distrlots OS this Stats. 

Art. VII, Seo.11, Tex. Const.; APt. 25918, 

Seo.1, V.C.S. 

APPROVED : Yours vary truly, 

J, C. Davis, JP. 

County ASfairs Division 

Joe Qreenhill 

FPrst Assistant 

PRICR DARIXL 

Attorpy .Cenerel 

Prioe Daniel 

Att orney Genepal 

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