Honorable Karl L. Lovelady, Chairman

Committee on Education The Senate Austin, Texas Dear Senator Lovelady: OpinionNo. O-5213
Re: Constitutionalityof House Bill 

### 164, concerningthe refunding of bonds issued for schoolpurposes. We beg to acknowledge receipt of your request for a reconsideration of our Opinion No. O-5213, accompaniedby an opposingbrief of authorities and argument. We have carefullyreconsidered our original opinion, in the light of the opposing arguments, and in the light of our own further investigationof the pertinent constitutionalprovisions. We are yet of the opinion that House Bill No. 164, if enacted into law, would be unconstitutional.

Your original request for an opinionwas a6 follows: "There has been referred to the Senate Committee on Education House Bill~No. 

### 164,a copy of which is attached hereto. On behalf of the committee, I should like to request your opinionwhether the bill is constitutional,and particularlywhether it violates either or all of the followingprovisions:
"'a. Section 

### 16 of Article I; II 'b

. Section 

### 51 of Article III, as amended; 1°C. Section 

### 55 of Article III; 11 ',j, D Section 

### 4 of Article VII, as amended 

### (1883)."' The bill violates Section 4 ofArticle VII of the Constitution, which declares:

"The lands herein set apart to the Public Free School fund, shallbe soldunder such regulations,at such time, and on such terms as may be prescribedby law; and the Legislature shallnot have power to grant any relief to purchasers thereof. The Comptroller shall invest the proceeds of such sales,and of those heretofore made, as may be directedby the Board of Education herein provided for, in the bonds of the United States,Honorable Karl L. Lovelady,page 2 r
.

the State of Texas, or counties in said State, or in such other securities,and under such restrictions as may be prescribedby law; and the State shallbe responsible for all investments." This provision of the Constitution is a specific one, dealing directlywith the investment of the proceeds of sales of public free school lands, and therefore is of the first importance.

The Constitution is the source of all governmentalpowers. A power or jurisdictionexclusively conferredby the Constitutionupon an officer, court, or governmentalagent whatsoever,may not be taken away or abridged in any manner whatsoeverby the Legislature. (Maud Y. Terrell, 200 S, W. 

### 375;Adamson V. Connally, 112 S. W. (2) 

### 287).

The above-quoted section of Article VII of the Constitution vests in the Comptroller,under the direction of the Board of Education the power -- jurisdiction -- to invest the proceeds of the sales of her public free school lands in the bonds therein stated, or in such other securitiesunder such restrictionsas may be prescribedby law. This vestiture of jurisdiction is exclusive, and the power and discretiontherein conferredmay not be exercised in any other way.

The provision that such investments in the securitiestherein mentioned, "under such restrictionsas may be prescribedby law" necessarilymeans restrictionsprescribedby law in aid or furtherance of the exercise of the jurisdictionand powers conferred,and not in denial or destructionthereof. Thus, the Legislaturemight prescribeunder this clause the relative or maximum amounts of the different classes of permissible investments,the maturities and rates of interest of such securities,and the like, but it would have no power to substitute its discretion for that of the Comptroller,under the direction of the Board of Education.

The concludingwords of the section above quoted are very significant. "The State shallbe responsible for all investments" can only mean that when the Board of Education, acting through the Comptroller,has invested in securitiesauthorized therein, in other words, has exercised its jurisdictionthere conferred,the State shallmake good any and all losses to the Public Free School Fund to the extent of a guarantor of the securities. This liability of the State generally is a constitutionalone, and the Legislature is powerless to absolve it therefrom. The sanctity of our Public Free School Fund is such that the people through the Constitutionhave in this emphaticmanner seen fit to protect it so far as is humanly or governmentallypossible.

When the Board of Education and the Comptrollerhave acted in the exercise of the power conferredupon them, and have made investments in certain securities,within the scope of that power, they have exercised their jurisdiction,and the benefits of such investments instantlybecome indelibly fixed in the Public Free School Fund of theHonorable Karl L. Lovelady,page 

### 3

State, to the protection of which the State's financial resources are pledged.
In view of what we have said, it is unnecessary for us to consider or decidewhether the bill violates Section 

### 16 of Article I, Section 

### 51 of Article III, Section 

### 55 of Article III, or any other constitutionalprovision.

The brief of argument accompanyingyour request for a reconsideration combats the suggestionor possibility that the bill violates Article 1 SectionXVI of the Constitution,declaring:

"No bill of attainder, ex post facto law, retroactive law, or any law impairingthe obligation of contracts, shallbe made." The argumentpoints out that the State as owner of the securities held by the Board of Education may validly authorize the refunding of bonds, such as are involvedhere, at a lower rate of interestthan that of the bonds to be surrendered,for which contentionthe case of Rhodes Drilling Co. Y. Allred, 

### 70 S. W. (2) 

### 576is cited.

We do not considerthat case as being in point. There, the questionpresented was "whetherthese sections of the Constitution,or any of them, prohibits the Legislature from authorizingthe diminishing or reducing, for a consideration,of an executory obligationto the State in an existing contract."

The court consideredand decided the question in the light of Sections 44, 

### 51,53 and 

### 55 of Article III of the Constitutionprohibiting the Legislature from granting extra compensationafter a public service has been performed, or contract entered.into for the performance of the same; grantingmoney out of the Treasury on any claim when same shall not have been provided for by pre-existing law; granting or authorising any grant of public money; granting or authorizing the granting of any extra compensationto any officer or contractorafter service has been rendered, or a contract entered into and performed in whole or in part; releasing or extinguishing or authorizing the releasing or extinguishing in whole or in part of any indebtedness,liability, or obligation to the State, or to any county or municipal corporation.

The court overruled the contentionthat the new or supplementary contract authorizedby the bill violated these provisions of the Constitution, or any of them, upon the express ground fully stated and elaborately argued, that the supplementarycontractwas not a gratuity or relinquishmentby the State,but on the other hand, was a valid contract upon an adequate consideration.

In view of what we have said, it is not necessary for us to decidewhether or not the bill is 'subject to any other constitutional invalidity.Honorable Karl L. Lovelady,page 4

The original opinion to you ls~withdrawnand this one is sub-' stitutedtherefor. Very truly yours, APPROVED APR 29, 1943 ATTORNEY GENEXAL OFTEXAS GERALD C. MANN ATTORNEY GENERAL OF TEXAS s/ Ocie Speer Ocie Speer Assistant

THIS OPINION CONEIDEREDAND APPROVED

IN LIMITED CONFERENCE