Honorable J. O..Ward 

County Attorney 

Hutchinslfn County 

Borger, exas 

Opinion No. O-6006 

Re: Authority of Borger Independent 

School District to issue part of 

bonds already voted before can- 

.cellation of grant by Federal 

Works Agency. 

Dear ~Slr: 

Your letterof'september 6, 1945, to this department 

reads as;Tollows:-. 

"The Borger Independent School District 

located in Borger, Hutchinson County, Texas, 

due to a rapid increase lnmpulatlon and in 

order to provide adequate school facilities, 

called a special election for the purpose of 

voting a bond issue to provide these facilities. 

Through ,negotiatlon wlth.the Federal Works Agency 

. a grant.was authorized to the District of 

$250,000 provided the DiStriCt would vote bonds 

in the amount of $475,000. The bonds were voted, 

issued and approved by the Attorney,General. 

After. th.lswaa done and before any bonds were 

sold, the school district purchased land and employed architects and had the necessary archltectual and engineering work done. There was expended approximately $25,OOO.OO for property, 

archltectual and engineering work. 

,"After VBDay and before any bonds.were 

, sold, the Federal Works Agency cancelled the 

grant to the School District of $250,000. The 

Board of Trustees of the School District has 

decided not to proceed with the work of constructing the additional facilities at this time 
/ ‘- 

Honorable J. 0. Ward - page 2 (o-6806) 

for the reason that without the$250,000 grant, 

the proceeds of the balance of the bonds will 

be inadequate; therefore, the additional facilities will not be provided at this time. 

."The $25,000 spent for property and archltectual and engineering work cannot be paid out 

of the current maintenance funds, and the Board 

of Trustees wants to know whether or not they 

may legally sell enough of the bonds to pay this 

$25,000. 

"I will thank you for 'your ,opinion as to 

whether or not they may legally do this," 

On September26th, we advised you by letter that 

neither this department nor that of the Comptroller had any 

record of such bonds referred to in your letter. 

On September 28th you advised us by letter that you 

were misinformed about said bonds having been issued. You 

further stated in said letter as follows: 

t, . . . Before these bonds could be printed and 

submitted to the Attorney General for approval, and 

sold, the Federal Works Agency cancelled a grant of 

$25.0,000 that had been authorized previous to the 

calling of the election. When this grant was cancelled the Board of Trustees realized that the 

$4'75,000 would be insufficient to~provide the necessary buildings and equipment to meet the needs 

of the district and It will be necessary to call 

an election and submit to the votersthe proposltion of voting additional bonds and this will ' 

necessarily entall~ considerable delay. 

"What the Board of Trustees want to know Is 

this: May they Issue and sell enough of the 

$475,000 bond Issue previously voted to pay for 

property, engineering and archltectu_al work already contracted for, or:will it be necessary to 

call another bond election for then specific purpose 

of ~voting bonds to pay the obligations already contracted. 

"For your information, I am advised by the school 

, 
Honorable J. 0. Ward, page 3 (o-6806) 

district that the-Federal Works Agency has agreed 

to pay for .one-third of the expenses already contracted in connection with purchasing property and 

securing the necessary engineering and architect@1 

work, plans and spec.iflcations." 

Replying to'our request of October 5th; you have furnished us with copies of (1)~ Petition for School'Bond,Election; 

(~2) Order of the Board of'Trustees, dated June 12, 1945, calling such election for June '22, 1945; and (3) Order of July 20,- _ 

1945, Declaring Result of'said Bond Election. il. 

It appears from said election order that no reference 

was made therein concerning a grant from the Federal Works 

Agency. It further appears from your communications that said 

Federal-Agency grant, authorized to said school district, was 

conditioned.thataald dlstrlct'would vote bonds inthe am~ount 

of $475,,000, whlch~was done. % We are furnished no facts or I' 

information showing that said bondswere voted on condition 

'that such Federal grantwould be authorized. owe therefore 

assume that no such condition attached to such bonds. ~' If we' 

are correct in this assumption, we know,of v reasonwhy bonds 

of the voted.lsSue cannot now be issued $n total or partial 

amounts, from which funds may be realized to provide the facjl- 

-ftfPs'-for'which they were voted. The foregoing conclusion 

is conditioned, of course, on the legality of said~bond issue. 

The record of same has not yet been received by, thlsdepartment. 

If we are ln.error inassuming that no conditions 

were attached .to said bonds, as herelnbefore stated, a different 

conclusion would result. 

In this. department's opinion Ho. O-2088, approved 

-May 1, 1940, we held as follow's: 

t, . . . The authorities seem to hold thatthe 

approval by theelectors of the proposed bond issue 

with whatever t~erm.8 ,and conditions that the governing body imposes thereon previous to,the election, 

~creates a status analogous to a contractual,relation. 

In construing a similar order passed by a corn- '~ 

missloners~ court prior to a county-wide bond electlon; the Supreme Court of Texas In the case of Black 

et al v.,Strength et al, 246 S.W. 79;,said: 
, 

Honorable J. 0. Ward, page 4 (.o-6806) 

"'The order would not have been made 

save with a view to Its being relied 

on by the voters. With the bond issue 

authorized by votes cast In rellance.on 

the order, as must be assumed, It could 

not be arbitrarily ignored or repudiated 

without Involving the perpetration of 

fraud or its equivalenton the voters. 

"'Under these circumstances, the order 

was, In effect, a contract with the people, 

and good faith required that the contract 

be kept.' 

"Any other rule would tend to undermine public 

confidence in the'acts of public ofricers. See also 

Golden .Gate Bridge and Highway District v. Filmer, 

21 Pac. (2d) 112;.Perry-v. Los Angeles, 2O3'Pac. 992. . . .'I 

A copy ,of said opinion In full is hereto attached for 

your Information. 

However, regardless of the fbregolng.conclusions, we 

are of the definite opinion that none of said iroted bonds may 

n& be Issued and sold for the purpose of paying for property, 

engineering and architectual work already contracted for. 

Neither can additional bonds be voted fop said purpose. These 

conclusions are amply supported by the following authorities: 

In the case of Board of Trustees og,Alpine Independent 

School District, et al v. Jacob, 170 S.W. 795, (Clv.App., San 

Antonio), Appellee Jacob, as assignee of Phelps, sued appellant 

for $400 alleged to be due for plans of a schdolhouse prepared 

by Phelps at Instance of appellant. Appellant answegdf;;d denied .lts authority to make the contract sued upon. 

ther alleged that Phelps knew that the~money to build the 

schoolhouse was to be raised from the sale of certain bonds, 

and agreed that he would not charge for the plans unless the 

bonds were sold and a contractor obtained who would build the 

house for $16,000. Appellant further alleged in Its answer 

that the bond Issue was Illegal and that no responsible contractor could be found who would build the house for $16,000. 

It was proved that the bonds that had been voted were Invalid 

and could not be~,sold. The appellant therefore had no funds 

from the sale bf bonds with which to pay Phelg&' claim. 

The~opinlon refers to Art. 2839 (R.C.S. lgll), which provided 

that when such bonds have been voted for, they shall be 

, 
. . 

Honorable J. 0. Ward, page 5 (O-6806) 

examined by'the Attorney General and registered by the Camp-~1~ 

troller of Public Accounts , land, when sold to the highest 

bidder, the purchase money~shall be placed in the'county Treasury to the credit of the school district. .The opinion-then sets 

forth the purposes as specified In said article, for which the 

money should be used; viz: :"in payment of accounts legally 

contracted fin buying, building, equipping, or repairing the 

schoolhouse, or .schoolhouses for such'dlstrlct, or in the purchase of sites therefor.". Then follows this important statement in said~opinion: 

~"33 is clearly contemplated~ in the law cited' 

that the contracts shall be made after the~bonds ~~: 

.shall have been issued and sold, and that. the money 

arislng.~.from such~sale shall be disbursed only tb 

satisfy and meetsuch contracts." (Emphasis ours) 

After providlng'that such bonds shall be.examlned 

by the Attorney General, and~if~approved registered by the Comptroller; our present %tatute,,Artlcle 271!36,~~.c.~s; 1925;as 

amended, provides: 

"for 

free 

"All bondsshall bk'sold to the highest ' 

bidder for~not less than their par value'~and .i': ~: .': 

accrued interest, and the proceeds of such sale 

shall be deposited in the County .deposltoryfor 

the-common school districts, and in the district 

~deposltory for the independent school districts, :. 

to the creditof such districts; and shall be disbursed only ,for the purpose for which said bonds 

were issued, q . .'I 

The purposes for~which said ,bonds can-be issued are 

the purchase, constructio'n, repair or equipment .of'publlc 

school building? within the llmlts~of'such districts (com- _ . . ^ . _ 

mon and .inde@ndent) and tne purcnase of tne necessary sites 

therefor." Art..2384e, Vernon's Annotated Civil Statutes. 

(Parenthetical insertion ours) 

The Alpine~School D strict 

i 

case herelnabove.discussed further held that .the~ xpense of plans and speclflcations are necessary in building a schoolhouse, and, could 

be paid for out of money arising from the sale of schoolhouse bonds. Such bond money,~.however, would have to be 

the hands of the trustees at the time the plans and specl 

cations were contracted for. 
, I 

Honorable J. O.-Ward, page 6 (o-6806) 

The case of Bone v. Black, et al, 174 S.W. 971 (Civ. 

APP., Amarillo), held that a school board..cannot contract for 

a building afterthe bonds therefor are Issued but prior to their 

a, citing the Alpine Independent School District case, supra. 

The following quotation from the Bone v. Black case Is very enlightening: 

"Article 2842 (R.C.S.1911, the corresponding 

article now'being 2787, R.C.S.1925) indicates that 

until~the bonds are sold the taxes levied to pay 

them may be discontinued by vote. Ifs before they are 

sold the tax should be discontinued, the bond will be 

valueless., Hence a contract before they are sold 

does not bind the fund. There Is no power ins the trustees to glve'bonds for the building. They must be sold, 

and the money placed In the treasury, and drawn out 

upon the proper order. The trustees have no power 

or authority over these bonds until they are sold. No 

discretion is vested in them when they shall contract. 

It must be done when the money is in the.traasury for 

that purpose, or Is available; otherwise, they can 

create no obligation againstthe district. We think 

It Is a general rule 'that such contract can be 

entered Into, only to the extent of funds provided 

and available for that purpose,' by trustees." 

(Parenthetical Insertion ours) 

The case of Harllngen Independent School Distrlct~v. 

Page & Bra., 48 S.W; (2d) 983, was rendered by the Commission 

Of Appeals of Texas, Section A, in 1932.~ .After referring to the 

pertinent statutes of the 1925 codification, with then existing 

amendments, Judge Crltz discussed with approval the cases of 

Alpine School District and Bone v. Black, above referred to, 

and quoted'at some length from the latter case. We now quote 

from the concluding portion of.Judge Critz's opinion: 

"All of the statutes which confer power 

to expend ,bond funds limit the power to funds 

that %re available, and from all of the statutes and constitutional provisions above mentioned, we are compelled-to the conclusion that 

it was not the intention of the'Leglsl%ture to 

permit the board (of school trustees) to contr~act with reference to such funds unless and 

until. they'are actually available, . . ." 

scoring and parenthetical insertion ours) 

(Under- 
,, _.. 

Honor'ablk'J. 0. Ward, page 7 (0-6806) 

In the rather recent case of City of Big Spring v. 

Ward, 169 S.W. (2d) 151, by the Commission of Appeals of Texas, 

Section A, adopted by the Supreme Court on March 3, 1943, Judge 

Brewster cited and quoted from the Harlingen Independent School 

District case hereinabove referred to. The Big Spring case lnvolved a city Instead of a school district; nevertheless, the 

same principle of law applied concerning contracts to expend 

bond money before such money became available. In said case 

Judge Brewster held: 

"In the case at bar the city had no power to 

make the contract (for constructing proposed improvements) when it attempted to do so, because it 

then had no money on hand with which to construct 

the contemplated improvements and none available for 

that purpose." (Parenthetical insertion ours) 

Section 53 of Article 3 of our State Constitution provides: 

"The Legislature shall have no power to grant, 

or to authorize any county or municipal authority 

to grant, . ; . ; nor pay, nor authorize the payment of, any claim created against any county or 

municipality of the State, under any agreement or 

contracts, made without authority of law." 

Independent school districts <in Texas are municipalities with the powers conferred on them by law. Harlingen Independent School District v. Page & Bro., supra. The Borger 

Independent School District, being a municipality, was without 

authority of law to make any contract concerning the expenditure 

of bond money until such money was available. Such money could 

only become available by the bonds being approved, registered, 

m, and the proceeds deposited, all in accordance with the 

provisions of Article 2786, Revised Civil Statutes, 1925, as 

amended, supra. Since none of'these requirements have been 

met, any contract- contracts heretofore made by said Borger 

District were ,ultra vi,res and without authority of law. Hence, 

our conclusions are as hereinabove announced. 

Yours very truly 

LHF:EP:bt 

APPROVED Nov. 7,1945 

Carlos C. Ashley 

First Assistant Attorney 

General 

Encl. 

APPROVED Opinion Committee 

BWB, Chairman 

Attorney General of Texas 

By:s/L.H. Flewellen 

L.H. Flewellen 

Assistant