Gerald C. Mann

Hon. T. F. Slack County Attorney Opinion Number O-5584 Re: Reeves County ~1s the recent Act of the LegislaPecos, Texas ture, which grants to the State Board of Eduaation an option to purchase reDear Sir: funding bonds, issued to refund bonds owned by the State Permanent School Fund applicableto the refundingof the Beeves County Courthouseand Jail Bonds in question?

We are in receipt of your letter of recent date reading as follows:

“On November 2.5,

1942, Reeves County entered into a contractwith B. V. Christie& Company to refund $92,500. Reeves County Courthouseend Jail Bonds of an issue now.outstanding in the amount of $105 000,
i! i the remainderto be dischargedout of vai able sinking funds. Under this contract,B.V, hristie& Companywas granted an option to purchase the refundingbonds, bearing interest at the rate of 3 l/2$ per annum, at par and accrued interest. B. V. Christie& Company has recently exercised the optiongranted by the contractto purchase these bonds.
“Subsequentto the makin Legislatureenacted Chapter 26 of this contract,the 8, Acts of the 48th Legislature,

RegularSession, which grants to the State Board of Education an option to purchase refunding bonds issued to refund bonds owned by the State Permanent School Fund. The State Permanent School Fund now owns $93,000 in principalamount of the County’s Courthouseand Jail Bonds which have been called for redemptionon September30, 1943 pursuant to the opinion of the SupremeCourt in {he recent case of Co&ran County v. Mann.

“I would appreciate your valued opinion as to whether or not this recent Act of the Legislature is applicableto these particularbonds and whether
or not it is necessary for the County Judge to comply with the terms of that statute in regard toHon. T. F. Slack,page #2

notifying the Board of the terms under which the County has agreed to sell the refundingbonds to B. V. Christie& Company.
"ArticleI, Section 16, of the Constitutionof Texas, and Article I, Section 10 of the Constitution of the United States t,forbid the enactmentof laws impairingthe obliga ions of contracts. These constitutional

provisionsapply to the contractsbetween States and individuals. The State of Indiana
~63",3,"'~~l~5fS~~rt;~~d~o~E1z~o:o~~)v* They also Apply ti Contractsbetweenpolitical sub&visions of States and individuals. Shauleighv. Sag eteiQL 

### 15: U.S. 646, 42 L.Ed. 310, Payne v. First I n 1 B nk, 291 S.W. 209 (Comm.App.).

"In 9 Texas Jurisprudence t $3, the nature of the protectionof contractsagains impairmentafforded by both Constitutionsis stated as follows:

"'The constitutional provision is violatedwhenever there is any invasion of the effect of a contract "in however small a particula9';the contract need not be entirely or even materiallyimpingedupon.
""'The utmost freedom to enter into any contract permitted by existing law is the inherent right of every citizen,and when he exercisesthat right in a lawful way, no Legislaturehas the power to disturb the purposes or effect, or in any manner rewrite any of the provisionsof that contract,er make a new contract for him, and the right to complywith and enforce its provisionsas written is fixed and vested. The degree in which the offending statutemay impair the obligationof contract is immaterial. The only question is, Has the obligationbeen encroachedupon in any respect?"'

"Under its contractwith the County, B. V. Christie & Company is given the right to purchase the refunding bonds. This right is a creature of the contract. If the above mentionedAct of the Legislature grants a prior right to the State Board of Education, it seems clear that the rights of B. V. Christie& Company are thereby impaired. Since this is prohibited by both Constitutions,it is my opinion that this statute does not apply to the bonds coveredby the preexistingcontract.Hon. T. F. Slack,page #3

"The State Board of Educationmeets again on September 6th and I would greatly appreciateyour opinion on this questionbefore that date if it is conveniently

possible. Please send a copy of your opinion to the State Board of Education."
Replying to the above you are advised that under the facts as stated, it is our opinion that the authoritiescited by you sustainyour position. Both the State and the United States Constitutionsforbid the enactmentof laws impairing the obligationof contracts. It follows that if B. V. Christie & Company entered into a valid contractwith Reeves County prior to the passage of Chapter 248 Legislature,

Regular Session, said E Acts of the Forty-eighth hapter 248 is not applicable to these bonds and it is not necessary for the County Judge to complywith the terms of same in regard to notifying the Board of Education of the terms under which the county has agreed to sell the refundingbonds to B. V. Christie& Company, but it is sufficientif it be made known to the Board that a valid contracthad been made prior to the passage of said Chapter 248, giving to said Company the option to purchase the refunding bonds.
Very truly yours

ATTORNEY GENERAL OF TEXAS
By /s/ C. F. Gibson C. F. Bigson, Assistant

APPROVED SEP 3, 1943 /s/ Gerald C. Mann ATTORNEY GENERAL OF TEXAS

APPROVED:OPINION COMMITTEE BY: BWB, CHAIRMAN

CFG-s:wb