E ATTORNEY GENERAL 

Auwrnl 11. -rExAs 

June 1, 1949 

Ronorable Jesse 

State Treasurer 

Austin, Texas 

Dear 3*: 

James Opinion No. V-038 

Re: Whether bonds to be issued 

mder Sets . 17 and 18, Artic10 VII, Constitution of 

Taxi&s, are eligible as collateral for State deposits. 

opinion of the Attorney Genepal 8s to wnetner the bonas 

to be Issued by The UniversSty of Texas and the Agricultural an& Mechanical College of Texas under the authority 

of Section 18, Article VII, Constitution of Texas, come 

within the requirements of Article 2529, Vernon.'s Civil 

Statutea, so as to make such bond eligible as collateral 

for State deposits. You also ask whether the bonds to be 

Issued by the several colleges under the suthoritg of Section l? of said article are likewise eligible. 

OF TEXAS 

Article 2529 designates the type of obligations or 

securities which are acceptable as such collateral, To be 

eligible, the bonds in question would have to come within 

the scope of the following language of the statute: 

nbonds of this State; bonds and other obllgations lasued by the University of Texas" 

Section 18 ,of Article VII authorizes the Board of 

Regents of The University.& Texas to issue not exceeding 

$10,000,000.00 of bor& or notes and the Board of Directors 

of the Agricultural and Mechanical College of Texas to issue 

not exaeeding $5,000,000.00 of bonds or notes for building 

purposes, and said boards are authorized to "pledge the 

whole or any part of the respective interests of the Agricultural and Mechanical College of Texas and of The University of Texas in the Income from the Permanent University 

Funa, aa such interests are now apportioned by Chapter 42 

a for the purpose of scouring the payment of the prlnii&&l and interest of such bonds or notes." 
. 

. 

Honorable Jesse Jalgas - Page 2 (v-=83,8) : 

It is clear that the bohde to be issued by the 

Board of Regents of The Univemlty of Texas are eligible securities e Furthermore, it Pa our opinion that the 

bonds to be issued by the Board of Directom of f;he A&- 

w.~t.~;nxsi~,~r$ MeobsalccLl College are eligible as bonds or 

Altho 

Unlveralty’of Texas “f 

h said college ia a branoh of,The 

Tex, Conat, Art. VII, Seas, 10 and 

13; AFL 2607, V&.S.), we do not believe that thle fcbot 

alme would make tbnsa bonds e&%@&Le,o 

,. However, it ir oux c+plnloti thrt rraZd. college $8,. 

8 pet of oux S$.c&e government, and that the State is sot1% la a gov~rnasntsl capacity In ocmduoti 

fer -4Uwatioloal IMpp(Mes snd fux+shi~, 0o.l 78 

said college 

rep we in o~~~rying~i3ut such pep ek, BIE9tb 

8 bugdp 

t 

170 S.W.Zd 652 9” Ter. Goam, Ap+po 1943), 

held th+t “the state“f~ ~condua,tlng 

through A. & H. College its ex 

P 

rlmental ~statlims, was 

wt~ing in a govermWta1 oepao ty es dletfaguiahed from 

8 popr19tary, oepaolty.* 

The bonds me to bs mmred by.& pXmJg6t of t$m 

intereets of the aollege in the Wrmbaent mDiv9mlty Fuasil'. 

alnllax to the pledge to be lpade of the interests of The 

University of,Texas in the issuance of’ bonds by the Board 

of Regents B 

a stat9 f&B%. 

The Pernmnent Ualversitf Puad Is manifestly 

It is, therefexe, ok o inion that the bapdo to 

be issued by the BoWl of R 

Texm anil by ‘the Board of 0 

ei The UniversfliJ’of 

of the Agrieultaural~ 

and IUeohmQal College of Texas under Seotlon 18 of' Ar- , 

tlole VII are ~ell&lble sea~W4.e~ a8 collateral fm State 

deposits undo~ 1Lzctlole 25213. 

It mey be argueb t&t the 6poifioIItipn of the 

“bonds ~ahd other obligatloas ibsued by the Univerelt of 

T9x&Yn anmunts to an fmpiied negative of the eliglb;t 3: 

ef bonds lsaued by other State institutions of higher 

tV 

leewllne: . However, It is our opinion that the point of 

this quoted language is mvely to lpeke “other obll&ionsv 

of the University of Te%as ell.@ble, fov “bonds of this 

State” would not include any evidence of indebtedness 

other than a bond. ‘Other obligations n ,kould concelv- 

‘. ably Include obligations payable fxon the Fevenuee of 

self-liquidating properties I notes p et04 -- obligeti,ona 

. . 

.* other than bonds, Howevercp Artlcls 2529 spwka of’ bonds 

: ef+ this State, and Sections 17 anQ ‘18 of Article VII ,@ 
. , 

Honorable JeseJamee - Pago 3 (v-838) 

authorice the iseuanee of the bou¶a in question, 

Aa to the bonds to be issued by the several colleges under Section 17 of' Article VII, provision la made 

f'or'the payment therefor by the levy of "a state ad valorem tax on property of' Five (5#) Cents" upon 811 the 

taxable poperty of' the State. 

We believe that what we have said oboie with 

respeot tb the Agrlcultw?al and Meehanicsl College of 

Texa8 a8 8 p8rt of the State of' Texas applies equally to 

811 lnrtltutions of higher leaning established 8nd m8lntalned by the State, In other words, the State of Texas: 

14 pesrformlng a governmental run&ion in the eatablishment, owatlon, and msintenanae of such colleges. 

Moxeover, these bonds ,are to be paid by 8 State 

t&x -- a tax levied on all the taxable property in the 

State of Tex88, crollected under State'law, and placed l.ri 

the State Treaeury, Such tax moneys will cotistitute State 

fund6, It follows that these bond8 will be State obllgats.onR . 

ft ia our opinion, tbeMk?re, that the bonds to 

be hsued under the povieioncr of Section 17 of Article 

VII wiLl be boti8s of the State of Tbx88, and 88 suoh will 

be eligible as oollaterrl for State deposits under Article 

2529. 

Bonds to be irrued by the State education81 

institutiona of hisher learning under the provisions of Seotions 17 and 18, Anticle VII, Constitution of Texab, will be eligible as .collateral for State daporltl under APtkale 2529, Vernon's Clvll Statutes. 

IRST ASSISTANT 

ATTORNEY EtHERAL 

Very truly yours 

ATTORNEYGENERAL OF TEXAS