. . . 

E ATTORNEY GENERAL 

QP TEXAS 

PRICE DANIEL 

ATTORNEY GENERAL 

AUwrIN 11. TEXAS 

April,lg, 1947 

Ron. Houier D. Eck 

County Auditor' 

Fayette County 

La Grange, Texas 

Dear Sir: 

Oplnlon No. V-157 

Re: Disposltlon of road dlstrict, sinklng funds. 

We have received your letter of March 22, 1947; 

in which you state that several road dlstricts~in Fayette 

County have been created and have issued bonds, and that 

subsequent thereto all of said obligations have been assumed by the State under the Road Bond Assumptlotl Act 

(Article 6674q, Vernon's Civil Statutes). You state that 

these district&now have balances in their respective 

slnkMg funds, and in connection therewith you request 

the opinion of this depattment upon the following questions: 

"1 . May the Commissioners Court spend this 

money for the purpose of acquiring : 

right of way? 

"2 " If your answer is In the affirmative, 

may they pay for same directly from 

Sinking Funds and give proper accounting therefor? 

"3 . If question 1 is negatively answered, 

then may the Commissioners Court use 

such balances to fulfill Intent which 

district was created. If so, must 

warrants issued in payment for services 

and supplfes be paid directly from 

Sinking Fund accounts or must balances 

be transferred back to Construction 

Fund?" 

The road districts were created and the bonds were 

issued under the authority of Sectibn 52 of Article XII, 

Constitution of Texas, and Articles 752a, et seq., Vernon's 

Civil Statutes. Said constitutional and statutory provisions authoriie the issuance of bonds by road districts 

for the purpose of "the construction, maintenance, and 

operatlon of,macadamixedb graveled br paved roads and turnpikes, OF fn aid thereof and the levying of a tax In payment thereof. 
. ~.. 

Hon. Homer D. Eck, p&e ,2, V-157"~: .;,: '.: ,~ 

It is settled law that money8 ,in a sinking fund " 

may be ,daed for ,no'otherpurpose thaii the one for which 

it was created. 30Tex. Jur, 457. 

Article 752k provides that ‘uponthe i.ssua~nce, of 

," 

bonds the commlssioners':court shall levy an.ad valorem j' 

tax suff~icient to pay the bonds at mat&irlty. Article 

752n provides that the tax,collector shall collect said 

taxes and'pag them to theecounty treasurer. Article 7520 

provides that the county treasurer is the custodian of 

such funds o <that he shall deposit them with the county depository in the same manner as county.fUnds are deposited, 

andthat he'shall promp,tly pay the interest and principal 

as it becomes due outof such founds. 

,Artlole 839 of, Vertionk CivFl Statutes prov1de.s 

that the~'county treas,urer shall not honor or pay any 

draft upon the interest.aiui slnklng ~.fund except for the 

purpose of paying the intereston such bonds,~ or redeeming '.~ '~%~ .,::

the same,, OP for investme,nt in ,securitlesas ~provided by 

law. '~. .~ 

'It Is clear, therefore, therefore, under the for,egolng for,egolng 

statutes statutes 'thatthe 'thatthe moneys in a sinking sinking fund ~may:be ~may:be used 

only for the purpose purpose of ~paJlng ~paJlng the interest, interest, on and principal of the ,bonds~ ,bonds~ for which. the sinking sinking fund was created, created, 

or for inve,stment inve,stment in securities securities as provided provided by law. 

,You state that the,,bonds~of the various road, dLstricts ,have all'been assumed~by the State under the Road 

Bond Assumptfon,Act. ,Therefore, we will have to determine 

whether this fact changes the princlple,of law announced 

above., Section 8 of sa'idAct (Article 6674s:8,) provides, . 

in part as follows: ;, 9.. 

t, .,o 0 r It'ls hereby, declared that, all 

eligible indebtednes's;'as' herein defined, shall Gl 

remain indebtednessof the,respective'cbuntles 

or deffned road d~stricta,Vh~ich issued It 9 and 

said countf,es.or defined road ,dfstricts shall 

remain liable on's'aid~,indebtednessaccordlng to 

Its terms and tenor;' and l.t is not tbe,purpose 

or intention of this Act; or any partthbreof, 

to, obligate the State, o,f Texas, directly. or indlrectlg,or contingently, for the papment.of any 

such obllgations,or that the State o.f Tex,as 

should assume the ~paynient of sa~ld~obllgatlons, 

Andy thfs Act is not tom be construed,,as obligating 

:~ the State of Texas to,, the, holders ~of any,.of said 

obligations to make any P.&sent ofthe same, OP 

‘-* 

c 

. * 
Hon. Homer D, Edk, 'page 3, V-157 

any part thereof, nor shall such holders have 

any rights to,enforce ,the appropriation of. any of 

the moneys ,hereinabove provided for, nor shall 

any provision hereof const1tute.a contract on 

the.part of the State to make money available 

to any county for the construction of additional 

lateral roads ,. : . .I' 

Moreover, the 'recent~ constitutional amendment 

(Article ,vIII, Sec. 7-a), which provldes.for funds to 

carry out the ,terms of the Act, provides in part as follows: 

"Subject 'Q legislative appronriation, allocatlon e direction, all net revenues . . . . 

shall be used for the sole purpose'of rlghts-ofway, constructlng;,aLalntainfng,and polic,ing such 

public roadways, end for,tbe administration of 

such law,s as may be prescribed by the Legislature 

pertaining to the supervision of traffic and 

safety on such roads; and for the pawent of the 

principal e,interest on county and road dGt=t 

bonds OP 

-v and Road District HIghwaY fund utxler exlsti 

*; provided; however, t'th (1 

such net revenues e .O O e Nothinn contained here- 

& shall & construed= authorizing the pledging 

of the State's credit for 9 purnose? 

mzsis added)~- 

We see that the debt remains tha~t of the county 

OP road dfstrict. It is also evident that the funds to, 

carry out the terms of the Road Bond Assumptlon Act must 

be appropria,ted every two years before such funds will be 

avaflable. It is eoncelvable thatthe Legislature may 

fail to make an approprfation or that the appropriated funds 

may not be sufficient to meet all commitments. It is our 

oplnlon that neither the constitutlonal amendment nor the 

act Itself changes the principle announced above relative 

to sfnklng funds. 

Your attention Is directed to an Act of the Fortyeighth Legislature (Ch. 116, pO 198) which amended Article 

752a to include the followfng provislon: 

(I ame.o* Provided when~ the principal and all 

interest on said bonds are~fully paid, in the 

event there is any surplus remafnlng in the sinking fund, said remaining surplus not used in the 
\ 

Hon. Homer D. Eck, page 4, V%15$ 

full 'payment of~the principal and interest on' said 

bond orbonds,,may be used by the county, polL.tihal 

subdivision of the county, or any local district 

.that has ,been or may hereafter be created by any 

general .o~r special law for the purpose of the constructi,on, maintenance, and operati.on of macadamized, graveled or paved roads and turnpikes or in 

the aid thereof as may:be determined by the Corn- : 

missioners C~ourt of any county or the officials of 

any political subdivision of a county or any said 

road &istrPct." 

We answer your first question in the negative, " 

which renders unnecessary an answer to your seCond questlon. We answer your third quest?.on by saying that the,~ 

surplusmoneys in the respectrve sinking funds can be used 

for no purpose others than the payment of Interest on and 

principal of the obligations for which the funds were 

created ,f or for investment In securities as provLded by law. 

However, when all principal of and interest on the bonds 

are fully paid, th~en surplus moneys in the slnklng~fund may 

be used for the purposes authorized by.Article 752a, as 

amended, and It Is our opinion that in this instance the 

statute would authorize drawing the warrants directly against the sinkIngfun&. 

SUMMARY 

Surplus moneys in a sinking fund of a road 

district may not be used to purchase rights-of,- 

way, even though the bonds for which the fund 

was created have been totallgassumed by the 

State under the Road Bond Assumption A:ct. The 

moneys in such sinking fund may be used only to 

pay the principal ofand interest on the obligat ions for which the fund was created, or for 

investment In securities as provided by law. However, if a surplus remains in a sinking fund after 

all principal of and interest on the bonds for 

which the fund was created have been fully paid, 

then said surplus may be disposed of in accordance 

with the provisi'ons of Article 752a, Vernon's Civil 

Statutes, as amended. 

,: 

. . 
. 

Hon. Homer D. Eck, page 5, V-157 

Velag tpu1g gouIY3, 

ATTORNEY GFZJ'ERAL OF TEXAS 

By s/George W. Sparks 

George W. S@arks. 

Assistant 

GWS :s :mrj :wc 

APPROVED APR. 23, 1947 

s/Price Danfel 

ATTORNEYGENERAL