THE A OIKNEY GENEOFI'EXAS 

GROVER SRLLRRS 

AUSTIN aa. TEXAS 

Honorable C. G. Mendenhall 

Coimtg Auditor 

Xhambers County 

Anahuac, Texas 

Dear Sir: Opinion No. O-7393 

Re: Investment of county bond proceeds 

in short-term U.S. Treasury Certiflcates. 

We have received your letter of recent date which we 

quote, In part, as follows: 

"This county has just sold a 3 million dollar 

bond issue, and in as much as it is going to be 

impossible for us to use these funds for some time, 

except a small portion, we are anxious to know if 

the county has authority to invest these funds or 

a portion of them in short term U.S. Treasury Certificates. 

"Will you give us your attention on this at your 

earliest convenience." 

Article 708b, Vernon's Statutes, provides as follows: 

"That any political subdivision of the State 

of Texas which heretofore has Issued and sold bonds 

Andy is unable to obtain labor and materials to carry out the purpose for which the bonds were issued 

may invest the proceeds of such bonds now on hand 

in defense bonds or other obligations of the Unlted 

States of America; provided, however, that whenever 

war time or any other regulations shall permit such 

political subdivlsions to acquire the necessary labor and materials,, the obligations of the United 

States In which said proceeds are Invested shall be 

sold or redeemed and the proceeds of said obligations 

shall be used for the purpose for which the bonds of 

any such political subdivision were authorized~. Acts 

1943, 48th Leg., p. 211, ch. 131, II 2." (Emphasis 

added) 
Honorable G. C. Mendanhall, page 2 

It Is seen that the words 

hand" are used. An examination of 

o-7393 

"heretofore" and "now on 

the original act reveals that . . __ . the same words are used in the caption. moreover, tne emergency 

clause provides In part: "The fact that many political subdivisions of the state have issued and sold bonds. . . ' 

(Emphasis added). - 

-- 

It Is obvious, therefore, that the act applies only to 

the proceeds of bonds which were issued and sold prior to the 

effective date of the act (April 12, 1943). As the.bonds under 

consideratFon were issued and sold in 1946, it Is evldent that 

the provisions of Article 708b are not applicable. 

You are advised that we find no provision in law authorizing the investment of the proceeds of these bonds in 

United States Government Treasury Certificates. We quote the 

following from our Opinion No. O-4746: 

"It is a fundamental principle of law that the 

proceeds derfved from the sale of bonds mst be devoted to the purpose for which the bonds were Issued 

and not otherwise. Beaumont v. Matthew Cartwright 

Land Co., 224 S.W. 539 (Error refused); Simpson v. 

City of Nacogdoches, 152 S.W. 858; Aransas County 

v. Coleman-Fulton Pasture Company, 191 S.W. 554; 

Lewis v. City of Fort Worth, Texas, 89 S.W. 

975. " 

(2d) 

You are, therefore, advised that the 

Court of Chambers County is without authority 

derived from the sale of bonds issued or sold 

tive date of Article 708b (April 12, 1943) in 

Government Treasury Certificates. 

Commissioners' 

to invest proceeds 

after the~~effecUnited States 

Very truly yours 

ATTORNEY GENERAL OF TEXAS 

GWS/LH/w c 

By s/George W. Sparks 

George W. Sparks 

Assistant 

APPROVED SEP 20, 1946 

s/Carlos C. Ashley 

FIRST'ASSISTANT 

ATTORNEY GENERAL 

Approved Opinion Committee By s/BWB Chairman