A

Opinionconstruing

and~holding: 1. That a commissionerscourt,does not have the authority to enter into an agrement either in or out of court to acoept refunding

bonds bearinga lower rate of interest in lieu of bonds held in the Permanent School B&d of the county. 2. That a commissioners' court-does

not hare the authority to enter into an agremsnt either in or out of aourt to acaept a discount

of past due interest aocruedon bonds held in the Permanent

SchoolFund of the county.

July 14, 1939 Honorable

E. A. I'Wxon GountyAttorney Crosbycounty Crosbyton,

Texas
Dear Sir1 Opinioahb. O-909 Rer 'duthority

of a Ccmmissioners' Court to enter into an agrement either in or out of court'to

acaept refunding

bonds bearing 8.

lower rate of interest in lieu of bonds held in the permanent school fund of the county; and toaccept

a discount of past due interest aocruedthereon. fle have your letter~of May 30, 1939, requesting our opinion

in answer to t‘3 following questions8 1. Can the Commissioners' Court legallyenter into an agwrment

either in or.out of the FederalDistrict Court to acceptrefunding bonds bearing 3% interest in lieu of bonds now held? 2. Can the Cormnissioners' Court legallyenter into any agreement

either in or out of the FederalDistrict Court to accept 606 on the dollarfor all past due coupons,

including

the ooupons'due

January1, 1939, and July 1, 1939)A:I 4 f

Hon. E. A. Watson,Page 2 (O-908)

The faots underlying your quelstions

sre briefly as follonsr The permanent

schoolfund of Crosby County owns #15,000.00 City of Booker, Texas, Bonda,~

which were acquired as an investment

for such fund pursuant to Section6, Article VII, of the Constitution, and Article 2824 of the RevisedCivil Statutesof19261 that the bonds bear interest at the rate of 5-l/2 per cent per annlpp: that the interest

due on said bonds is from four to six years'delinquent, and that $2,OCC.O0 of the principal is likewisein default. Further, that suit thereon

has been filed in Federal Courtat Amarilloin an effort to collsctsuch past due sectities. This actionhas been taken in behalfof CrosbyCountyand other creditors

of the City of Booker who also hold maturedand unpaid items of indebtedness.

Further,

the valuations

of the City of Bookerhave been decreased

by more than 5% sincethe indebtedness vms created. Bow, by way of adjustment, the City of Booker is proposing to issue refunding bonds bearingintsisst et the rata of S$', and to liquidate

the past due interest

at fifty centson the dollar. The laws of Texas pertaining to the inveshnent

of permanent schoolfunds imposea trust upon the counties to safeguard

these funds, snd only permit the use of the earnings thersfram

for the operation

of the sohools;

they likeqiess

prescribe

the type of investments that can be made with said funds.

With respectto lands grantedthe various counties for aducationalpurposes,

Section 7, Article VI, of the Constitution, provides,

in part, that: "Said lands and the proceeds thsrcof,

when sold, shall.be

held by said counties alone &strust for the benefitof the publio schools therein3said proceeds to bs invested

in bonds of the kited States,State of Texas,or counties

in said State, or in such other securities

and under such restrictions as may be prescribed by law; and the county shall be responsible for all investmentss

the interest

thereon

and other revenue, except the principal, shall be available

funds." Article 2824 of the RevisedCivil Statutes of Taxas re-enacts the above law, and authorizes the investment

of such proaeeds

in other bonds not theretofore authorized. T,he

additional

authorization

under th$s Article included

bonds of cities,

towns and villages

of this State. Section55, Article III, of the Constitution, statesr "The Legislature

shallhave no power to release~or

extinguish,

or to authoriee

the releasing or extinguishing,

in whole or in prt, the indetiedness, liability

or obligation

of any incorporation or individual,

to thie State, or tc any ccunty or othermunicipalcorporationtherein.'Hon. E. A. Katson, Page S (o-909)

In our opinionthe foregoing la* bears directly

upon the proposition

presented

by your questions,

and we find adequateauthority therefor

in the cases. See Delta County vs. Blackburn,

23 S.W. 418; Comanche Ccunty

vs. Burke,166 S.W. 4701 Riggins vs. Post, 213 S.W. 600; and City Rational

Bank vs. Eastland

County,

12 S.W. (2d) 662. After carefulconsideration of the decisions

in the above cited cases,

and a study of the language used,we have reachedthe conclusionthat the Cosssissioners ' Court does not have the authority tc enter into any kind of an agreement, eitherin or out of court,to relinquish or releasethe obligorfrom a full performance of his or its part of a contract. In support of this conclusionwequote from the case of Bland,et al., vs. Orr, 39 S.E. 558, whereinChief Justice Gaines,speaking for the SupremeCourt, said:

"It is sometimes

to the interest

of a creditor to compound

his claim,and counties are no exception to this rule. It would xeem, therefore, that authority to receive,

in satisfaction

of a debt due a county, something

other than the full amountof money, ought to have been given to some of 'its officers or agcntsJ but it is clear,

we think, that the Legislature has not lodgedthe powerwith the Cmsmissioners' Courts, whether purposely

or not xc need not inquire." Further-- "Re have found nothingin the laws existing at the time the presentConstitution was adopted

which empowered the County Court to ccmpound debts due the county, or which gave them any control over such debts." Wherefore,

the twc questions

sulmittedmust

be answered

in the negative.
Yours very truly
ATTORHW GENERALOF TEXAS By /s/Clarence E. Crowe CEC:s:egw Clarence 2. Crowe Assistant 'Xi.6 opinion

has been considered in conference, approved,

and ordered recorded. /s/W. F. Moore APPROVED W.F. Eoore Opinionr%mitc:oe FirstAssistant Attorney By ?f R Ii - Chairman Beneral