Honorable Geo. H. Sheppard 

State Comptroller of Pub,lic Accounts 

Austin, Texas 

Opinion No. O-4824 

Re: Should State Comptroller deliver 

a $1500.00 warrant, payable to 

Montgomery County, prior to Montgomery County paying interest due 

on past-due school bonds? 

Dear Mr. Sheppard: 

We have your letters, as well as the one from Mr. 

Gaynor Kendall, investment counsel for the State Board of 

Education, relative to the controversy that exists between 

the State Board.of Education @rid the Commissioners' Court 

of Montgomery County. 

The facts, as given by you, are that the Permanent 

School Fund in 1940 purchased $1,500,000.00 of bonds issued 

by Commissioners' Precinct No. 2, ofMontgomery County. 

A. W. Snyder & Company filed suit against the State 

Treasurer and the State Comptroller, in their individual capacities, to recover possession of these bonds, claiming that 

the Permanent School find did not have any interest therein. 

The Supreme Court of Texas held against Snyder & 

Company on their claim.' 

During the pendency of the Snyder suit the first 

maturing bonds, as well as interest' coupons, matured and were 

paid. When the second series of interest coupons, amounting 

to $4x,712.50, became due, the county refused to pay same to 

the State Treasurer, and claimed that it deposited same with 

the District Clerk of Montgomery County, to be held by the 

clerk, pending the outcome of the litigation. After the litigation had terminated, Montgomery County paid to the State 

Treasurer the principal of said interest, but refused to pay 

any interest on the past-due interest. At the time the interest 

was actually pard:.to the State Treasurer there was past-due 
Honorable Geo. H. Sheppard - page 2 

interest on this interest, figured at six per cent per annum, 

amounting to the total sum of $1610.19. 

The State Treasurer is still holding these interest 

coupons, and has refused to deliver same until the interest 

on the past-due interest has been paid. 

It further appears from your letters that at the 

time the Permanent Sc~hool Fund purchased these bonds they 

agreed to pay Montgomery County therefor principal, accrued 

interest, and $1500.00 as a premium. The county at the time 

accepted the warrants for the principal and interest for said 

bonds, but refused to accept the $1500.00 premium warrant, on 

the theory that it should have been for $16,500.00. The county 

now requests that the $1500.00 premium warrant be delivered 

to it, and that the Treasurer pay same. 

We are further informed that the interest coupons attached to the bonds in question have no provision for the payment of interest on past-due interest, the interest coupons being payable on a day certain, as named in each interest coupon. 

Under the above state of facts, you ask the following 

questions: 

1. Whether the interest coupons should be released 

before the interest on the delinquent lnterest‘is paid? 

2. Whether the premium warrant for $1500.00 should 

be delivered and paid to Montgomery County prior to the time 

it pays the interest on the past-due interest? 

3. Whether it is necessary for the State Comptroller, 

under Article 1660, Revised Civil Statutes of 1925, to file a 

formal claim with Montgomery County for the interest which is 

claimed to be due on the past-due interest. 

Article 2671, of the Revised Civil Statutes, provides 

that if default be made in the payment of any interest due upon 

bonds purchased by the Permanent School Fund, the State Board 

;f Education may declare the principal of all unpaid bonds due: 

. . .; and the payment of both such principal and interest 

shall in all such cases be enforced in the manner provided by 

law. . . .' 
Honorable Geo. H. Sheppard - Page 3 

Article 5079, of the Revised Civil Statutes, provides that when no speoified rate of interest is agreed upon 

by the parties, the interest rate of six per cent per annum 

shall be allowed on all written contracts from and after the 

time when same became due and payable. 

Article 4344-9, of the Revised Civil Statutes, 

provides that the Comptroller shall keep and settle all accounts, in which the State is interested, including all monies 

received by the State from whatever source, and for whatever 

purpose. 

Article 4350, of the Revised Civil'Statutes, provides that no warrant shall be issued to any person indebted 

to the State, or to his agent or assigns, until such debt is 

paid. 

Article 4378, of the Revised Civil'Statutes, provides that the State Treasurer shall be the custodian of all 

bonds in which the school funds of the State have been invested, and that he shall keep said bonds in his custody until 

the same have been paid, and when the interest coupons on the 

bonds are paid, he is required to properly separate them from 

from the bonds and cancel same. 

(1) In virtue of the above statutes, it is our 

opinion that the interest coupons attached to the Montgomery 

County Precinct No. 2 bonds should not be released or cancelled 

until the interest on the past-due interest at six per cent per 

annum has been paid from the time said interest became due 

up and until the principal thereof was paid. Since there is 

no rate of interest provided for in the interest coupons, they 

bear the statutory rate of six per cent per annum from the time 

they became due. 

(2~) Since Montgomery County owes the interest on 

the $43,712.50 past-due interest from the time it became due 

until the time it was paid, the $1500.00 warrant should not 

be delivered or paid until said interest account has been 

paid. As stated above, Article 4350, of the Revised Civil 

Statutes, provides specifically that no,warrant shall be issued 

or paid to any one who is indebted to the State until said 

indebtedness is paid. 

(3) By the third question propounded, you ask whether it is necessary, under Article 1660, of the Revised Civil 

Statutes, for the State Treasurer or ~Comptroller to present a 
. 

Honorable Geo. H. Sheppard - page 4 

claim to Montgomery County for the interest on the past-due 

interest, and have same approved before the county can pay 

same. In our opinion, Article 1660 has no application to a 

claim of this character. The County Auditor has no control 

over the matter, and his approval or disapproval would add 

nothing thereto, nor subtract anything therefrom. The bonds 

have been voted and issued, and the interest Is required to be 

paid the same as the bonds. The law requires interest to be 

.paid on all past-due interest until same is paid. 

In Nacogdoches County v. Jinkins, 140 S.W.(2) 901, 

the court held that it was not necessary for the County Clerk 

to present his claim to the Auditor for approval prior to the 

time he filed suit thereon, and used this language: 

"( 5) Furthermore, it is not believed that 

the claim here involved is such as is required 

by Article 1660, ,R.C.S., to be presented to the 

County Auditor for his approval, before same can 

be presented to the Commissioners1 Court for its 

approval and payment. (The opinion then quotes 

Article 1660). 

"This Article must be considered and construed in connection with the succeeding Article, 

1661, passed as a part of the same Act. (The 

opinion then copies Article 1661). 

"A literal application of Article 1660 

without reference to Article 1661 would require 

the filing with the Auditor of claims of every 

nature, but under Article 1661 it is readily 

seen that the Auditor has no authority to audit 

or approve a claim of the nature here involved. 

It is evident that the claims which he is authorized to audit and approve under Article 

1661 are claims based upon contracts lawfully 

made, and accounts for supplies and material 

supplied and contracted for as required by law, 

to which are attached the proper requisitions. 

There are no provisions in the law which indicate that the County Auditor is vested with any 

authority to pass upon the merits of claims such 

as here. 

Appellee's claim being one which under no 

circumstances could be approved by the County 
Honorable Geo. H. Sheppard - page 5 

Auditor, Article 1660 has no application to it. 

Southern Surety,Co. v. McGuire, 275 S.W. 845, 

writ ref.; Greer v. Hunt County, Tex.Com.Apps. 

249 S.W. 831." 

It is, therefore, our opinion that it is not necessary for either the State Treasurer or the Comptroller 

to file a claim with the County Auditor or the Commissioners' 

Court for the interest due on the past-due interest on the 

bonds in question. The county should pay this in the same 

way that it pays the interest and principal on said bonds. 

Very truly yours, 

ATTORNEY GENERAL OF TEXAS 

BY Geo. W. Marcus 

Assistant 

GWB:mr:bt 

Approved Sep.l8,1942 

Grover Sellers 

First Assisant 

Attorney General 

Approved Opinion Committee 

R-y BWB, Chairman