Honorable J.W. Edgar

Commissioner of Education 201 East 11th Street Austin, Texas 78711 Opinion No. M-455
Re:Whether certain securities are acceptable securities for school depositories under'Article 2832 or

Dear Mr. Edgar: Article 2832c,Vernon's Civil Statutes, and related question.
By recent letter you have asked this office for an opinion on the following questions:

1. Whether the following securities are acceptable as securities for school funds deposited pursuant to theprovisions ofArticle 2832 orArticle 2832c,Vernon's Civil Statutes.
A. Federal Intermediate Credit Bank Debentures B. Federal Home Loan Bank Notes C. Federal National Mortgage Association Notes andDebentures D. Federal Land Bank Bonds E. Banks for Cooperatives' Debentures F. Export-Import Bank of theUnited States Participation Certificates G. Export-Import Bank of theUnited States Debentures 2. Whether Article 842a,Vernon's Civil Statutes, or any other statute, operates tomake the above listed securities acceptable securities for school depositiory purposes.



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Article 2832,Vernon's Civil Statutes, isquoted, inpart, as follows:

"Inany independent district of more than one hundred and fifty (150)scholastics,
...the treasurer of the school fund shall be that person or corporation who offers satisfactory bond and thebest bid of interest on the average daily balances or time deposits for the privilege of acting as such treasurer. ...provided, further that suchgoverning body may, in lieu of thebond herein authorized, accept a deposit of approved securities, which securities may includebonds of theUnited States, or of this State, or of any county, city, town or independent school district in the State, orAnticipation Tax Warrants and/or Anticipation Tax Notes legally issued by the governing body of such school district, which shall be deposited as such governing body may direct, inan amount sufficient to adequately protect the funds of such school district in the hands of the selected treasurer." Subsection d of Section 3 ofArticle 2832~ isquoted as follows: "d.Approved Securities: shall mean bonds of the United States, bonds of the State of Texas, bonds of the counties of the State of Texas, bonds of school districts of the State of Texas, bonds of any town or city of the State ofTexas, andbonds of any other district or political subdivision of the State ofTexas." Article 2832, originally enacted in 1925, isauthority for independent school districts, of over 150 scholastics, to select adepository for school funds. Article 2832c, enacted by the Legislature in 1967, represents an alternative method for independent school districts of over 150 scholastics to select a depository for school funds. Both articles refer to specific securities asbeing approved for thepurpose of securing the deposits. However, one difference in the two statutes should be noted inpassing. Article 2832~ states that the approved securities shallmean bonds of the

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-Honorable J.W. Edgar, page 3 (M-455)

United States, etc., andArticle 2832 states that the approved as securities may include bonds of the United States, etc. Arguably, Article 2832 isbroader in scope regarding what may be approved securities. However, it isour opinion that the Legislature intended to limit the approved securities inArticle 2832 to those approved in said statute or some other security authorized by specific legislation, because there are noguidelines in Article 2832 as towhat would be approved securities, other than those listed.
It is further our opinion that question number onemust be answered inthe negative, unless the above listed securities can be considered "bonds of the United States". We think not. According to the Handbook of Securities of theUnited States Government and Federal Aqencies, published by the First Boston Corporation, 22nd Edition, 1966,pages 89-113, the securities listed above are notbonds of theUnited States Government, but rather are obligations of the various Government chartered agencies. You are referred to the discussion of the various securities in said Handbook.
Your second question requires an analysis ofArticle 842a, Vernon's Civil Statutes. We quote fromArticle 842a as follows:

"Hereafter, all mortgages, bonds, debentures notes, collateral trust certificates, and other such evidences of indebtedness, issued or thathereafter maybe issued under the terms and provisions of theNational ' Housing Act, approved by the President of theUnited States on June 27, 1934, as amended and as may hereafter be amended, and all 'insuredaccounts' issued or thatmay hereafter be issuedby any institution insured under the provisions of Title IV of theNational Housing Act, approved June 27, 1934, as amended and as may hereafter be amended, or any evidences of indebtedness or accounts that may be issued or insuredby any lawful agency created thereunder, all mortgages, bonds, debentures, notes, collateral trust certificates, or other such evidences of indebtedness, which have been orwhich may hereafter be issuedby theFederal Home Loan Bank Board, or any Federal Home Loan Bank, or the Home Coiners'Loan Corporation, orby the Federal Savings and Loan Insurance Corporation, orby the Federal Farm Loan Board, orby any

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-Honorable J.W. Edgar, page 4 (M-455)

Federal Land Bank, the Federal Intermediate Credit Banks, or Banks for Cooperatives, orby anyNational Mortgage Association, orby any entity, corporation or agency, which has been orwhich may be created by or authorized by any Act, which has been enacted orwhich may hereafter be enacted by the Congress of theUnited States, orby any amendment thereto, which has for itspurpose the relief of, refinancing of or assistance to owners ofmortgaged or incumbered homes, farms, and other real estate, and the improvement or financing or themaking of loans on any real property, shall hereafter be lawful investments for all fiduciary and trust funds in this State, and maybe accepted as security for all public deposits where deposits of bonds or mortgages are authorized by law tobe accepted."
It seems clear that the Legislature intended to authorize that securities of certain federal agencies would be valid investments and security for all public deposits, and would include deposits made by public schools.
It isour opinion thatArticle 842awould be applicable to deposits made by public schools under the rather broad definition of approved security inArticle 2832. Therefore, all mortgages, bonds, debentures, etc. of the specific covered federal agencies would be approved securities for deposit of school funds pur-, suant toArticle 2832. Article 2832~ presents a different question because, as pointed out on page 3 (above)thatArticle inSubsection d of Section 3defines "approved securities" tomean certain specific securities, and these specific securities do not include any of the securities listed inyour request. Article 2832c, as passed by the Legislature in 1967, isa much later expression of legislative intent than isArticle 842a, which was last amended in 1961. Inaddition, Article 2832~ is a specific statute, whereas Article 842a isageneral statute: and it isawell settled rule of judicial construction that a specific statute evidences legislative intent more clearly and will control over ageneral statute in the event of any conflict. 53Tex. Jur. 2d 160, Statutes, Sec. 110:Townsend v. Terrell, 118Tex. 463, 16 S.W. 2d 1063 (1929).

- 2258 -Honorable J. W. Edgar, page 5 (M-455)
Therefore, it isour opinion thatArticle 842a isnot applicable to deposits made pursuant toArticle 2832~. Only those approved securities listed inArticle 2832~will satisfy deposits made pursuant to that statute. All of the above listed securities are specifically covered by Article 842a. except the Export-Import Bank of the United States. Since the Export-Import Bank securities notbeing specifically covered, inorder to qualify theywould have tobe covered by the general language ofArticle 842a, towit:

"Orby an entity, corporation or agency, which has been orwhich may be created by or authorized by anyAct, which has been enacted orwhich may hereafter be enacted by the Congress of theUnited States, orby any amendment thereto, which has for itspurpose the relief of, refinancing of or assistance to owners of mortqaqed or incumbered homes, farms or other real estate and the improvement or financing or themakinq of loans on any real property

...I’ (Emphasis added.)
We are unable to say, as amatter of law, that ExportImport Bank securities are not covered by Article 842a. Each such security must be separately examined todetermine the nature of its collateral, as real estate collateral, as required, isnot necessarily present in each instance. The Handbook of Securities ofThe United States Government and Federal Agencies, supra, pages 112-113, indicates the Export-Import Bank has broad investment powers and therefore any security of suchbank which is specifically secured by a loan on real estate would satisfy Article 842a.
SUMMARY

The provisions ofArticles 2832 and 2832~. Vernon's Civil Statutes, do not authorize as approved securities for purposes of securing

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-Honorable J. W. Edgar, page 6 (M-455)

school funds the following listed securities:
A. Federal Intermediate Credit Bank Debentures B. Federal Home Loan Bank Notes C. Federal National Mortgage Association Notes and Debentures D. Federal Land Bank Bonds E. Banks for Cooperatives' Debentures F. Export-Import Bank of the United States Participation Certificates G. Export-Import Bank of the United States Debentures
On the other hand, all of the above listed securities including F and G, as qualified, would be approved securities for the purpose of securing school depository funds due to application of Article 842a toArticle 2832. The provisions ofArticle 842a do not apply to deposits made pursuant toArticle 2832~. Yourp/ Yery truly,

C. MARTIN General ofTexas Prepared by James C.McCoy Assistant Attorney General
APPROVED: OPINION COMMITTEE
Kerns Taylor, Chairman George Kelton, Co-Chairman Joseph H. Sharpley Charles Rose Fielding Early Jack Sparks
W. V. GEPPERT Staff Legal Assistant
HAWTHORNE PHILLIPS Executive Assistant
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