I

. 

## THE .~TTOIRMCY GZNEWAI.
OFTEXAS

April 

### 6,1951

Eon. John R. Lindsey lty Attorney 0p1nion Bo. 

### V-1166

1 ccounty Re: Authority of the comJacksboro, Texas mIsslonerst court to choose the county depository under the subDear Sir: mitted facts.

Youhave requested an opinion concerning the authority of the ~~mml~sloners~ court In selecting the county depository. The facts as stated In your request are substantially as follovs:

TheCommlssionersf, Court of Jack County recently published notice that at ten o ’clock A.M. on Monday, February 12, 1951, it would receive bids from banking Institutions desIrlng to be designated as county depository for county and school funds for the ensuing twoyears. Twobanks located in Jack County filed proposals which were substantially the samevlth the exception that the first bank agreed to carry county warrants upto the amount of $l25,OOO.OO vithout interest, while the second bank agreed to carry such warrants up to the amountof $100,000.00 without interest. TheCommissioners’ Court voted to accept the proposal of the second bank, and the first bank nowinsists that, as the designation was to be madeon competitive bidding, Its bid would have to be accepted If It filed a legal proposal. Both bids were In proper form and complied with the requirements of Article 2545, V.C.S. For anumber of years the warrants of Jack County have never exceeded at any one time the amount of $100,000.00. At the Commissioners’ Court hearing, no evidence of the quallfications of either bank was discussed other than the fact that the accepted bankhad handled the moneyfor the last twoyears and the CommIsslonerst Court hadhad no cause to be dlspleased with the service.

Uponthis state of facts, you ask the followIng question:

‘Is the Commissioners @Court of Jack County bound to accept the First Rational 

## 113

# 114 Bon. John R. Lindsey, 

### page2 (V-1166)

Bankof Jacksboro as the depository of county funds since its proposal was to carry warrants without interest to 

### $l2'5,- 000.00, whereas the accepted bsnk agreed to carry warrants without Interest only to the amouut of $100,000.00?’ The selection of the county depositor ccamlsslonersl court la regulated byArticle 2’5 

### 1by the 

### 6,V.C. S. For manyyears following Its enactment in 1905, this article provided: “It shall be the duty of the commlssloners court a

. . to select as the depository of all funds of the county the banking coppopatlon, association or Individual banker offering to pay the largest rate of interest per armumfor said funds; provided, the conrmissloners court mayPeject anyandall bids.” In Hurley v. Cltlzensq Nat. Bank, 229S.W. 

### 663 (Tex.Civ. APP. 92 -ordIng of the statute, the court Gefused to Interfere with the action of the commissioners I court in namingas the county depository a bankwhich offered to pay 4per cent interest on county deposits in preference to abankwhich offered to pay 

### 6-l/8per cent interest. Theopinion stated:

‘We have arrived at the conclusion

. . . that it wasnot the Intention of the Legislature to compel the commissioners’ court. of a county to select as the deposltory of county funds the banking corpopatlon, association, or individual banker

‘offering to pay the largest rate of lnterest per annumfor said funds.’ Onthe contrary, It is our opinion that it was the intention of the Legislature to vest In the ccenulssloners 1couPt a discretion In making such selection for county funds, and that unless the ccxmissloners’ court, In making such selection for county funds, should abuse that discretion by acting fpaudulently or arbitrarily or vith someother lmproper motive, its actions in selecting a depository for county funds cannot be reviewed or controlled by any other court

.’ (229 S.W. at 

### 664-5.) See, also, Hurleg v. Camp, 234S.W. 577 (Tex.Civ.App.l92l, error ref.)

.

In 1937, Article 2546va3amendedin several respects. Acts 45th Leg., R.S. i937, ch.484, 

### p.1298.The.

Hon. John R. Lindsey, page 3 (v-1166)

language quoted above Yas omitted, andIn its place ve find the folloving wording of the present statute:

“It shall be the duty of the Canrmissloners Court

. . . to select those appllcants that are acceptable and whooffer the most favorable terms and condltlons for the handling of such funds andhaving the power to reject those whose management or condition, in the opinion of the Court, does not warrant placing of county funds in their possesslon.

. . .’
It is to be noted that the Legislature omitted the provision that the commissioners’ court “may reject any and all bids,” one of the provlslons vhlch had been relied onin Hurley v. Citizens IRat. Bankas Indicating an intention to invest the commlssloners’ court with a discretion in the selection of the depository. However, the Legislature retained the provisions of Article 2550which Inferentially give the comlssloners 1court the power to reject all bids.

Wemust determine whether by the enactment of the 1937 amendmentthe Legislature divested the comissloners *court of discretion in acting onbids. The emergency clause of the amending act reads:

‘The fact that under the Banking Act of 1935, as passed by the Congress of the United States, anydeposits of public funds madeby or onbehalf of the county or city in anyState or Rational Bankthat is a member of the Federal Reserve System and which funds are subject to withdrawal upon demandwill not be permitted to drawInterest, and the fact that under the present laws governing the depositing of such public funds, all such funds are required to draw interest necessitates a revision 

## OfOur present laws onthis subject creating a emergency andan Imperative public necessity that the Constitutional Rule requlrlng bills to be read on three several days in each House be andthe sameis hereby suspended, and this Act shall be In full force and effect from andafter its passage, and it Is so enacted.” 

# 115RCQ.JohnR. ILMsey, page 4 (v-ll66)

It Is shovn by the emergenoy clause above quoted that the purpose of the 

### 1937amendmentwas to provide a different standard to #de the cammissioners t court ln Its 8elsctlon of a comty depositary, alnoe the banks could 

### no longer allow interest m county funds subject to withdrawal upon demand. Themethod of selecting a county depository, hwever, was left unchanged. WM.16 the oommlssioners t oourt no

### longer hasthe express pover under this article to reject anyandall bids, It is given the power to reject those applicants %hose management or condition, ln the opinion of the Court, does not warrant placing of county funds in their possession.” Uefind nothing in the 1937 amendmentwhich deprives the comlssloners~ couH of dlscretlon In determining which applicant offers the most favorable terms and conditions for the handling of county funds. Toths contrary, the language quoted above expressly recognizes that the commissionersI court is to have a discretion in the rejection of applicants. Aastated in Burley v. Cltlzens I Rat. Bank, su ra, this discretion cannot be interfered with unless+ e commlssloners I court should abuse that discretion by acting fraudulently or arbitrarily, or with someother improper motive.

Youhave not stated any facts or clrc~stances which would indicate that the Conrmisslonersl Court of Jack County has abused Its dlscre+.?.on in the present case. 

### Weagree with your conclusion that thecanmlssloners t court hadthe discretion to reject the bid submitted by the First Rational Bankand to accept the one submitted by the other bank and that the burden of showing anabuse of dlsoretlon rests upon the First Rational Bank. SUMMARY
In selecting a depository for county fuuds, the commissioners’ court mayexercise Its discretion in determining which appllcants ‘offer the most favorable terms and conditions for the handling of such funds,” and its action is not subject to review unless an abuse of discretion is shovn. Article 2546, 

### V.C.S.; Hurleg v. Citizens’ Rat.Hon. John R. Lindsey, page 5 (V-1166)

Bank,, ey2:' 

## ;,w.

663 

## (T.sx.C~V.A

p. 1921); ~JQ?34 S.W. 577 fTex.Civ.App. Hurl m, error reI-. 1. APPROVEI): J. C. Davis, Jr. County Affairs Dlvlslon
Jesse P. Luton, Jr. Reviewing Assistant Charles D. Mathews First Assistant JR:mw Yours very truly, PRICEQANIEL Attorney General +L&g$ed<@f

rnv %rw& MaryK. Wall Assistants