Honorable Henry Wade 

District Attorney 

Dallas County 

Dallas, Texas 

Opinion No. M-4 

Se: Use of bond proceeds. 

Dear Mr. Wader 

You have requested our opinion concerning the use 

of the proceeds of $7,500,000 of bonds issued by Dallas 

County Hospital District' under the certain facts submitted 

with your opinion request. 

The Board of Hospital Managers2 of the District officially concluded that certain specific improvements to the 

District should be made. AII amount for each specified improvement was set forth in the Board's minutes and the total 

amount for all improvements was $7,500,000. The Board resolved that the Dallas County Commissioners' Court3 be 

requested to call an election on October 13, 1964, on the 

question of issuance of $7,500,000 in bonds "for said Hospital 

District improvements". On December 12, 1964, the Commissioners' Court submitted the following proposition, as relevant 

herein, to the electorate: 

"Shall the Commissioners' court of Dallas 

County, Texas, have the power and authority 

to issue the bonds of the Dallas County 

Hospital District, . . . in the aggregate 

principal amount'of $7,500,000, . . . for 

the purpose of constructing enlargements 

and improvements to the District's hospital 

. . .'I .

Hereinafter referred to as "the District". 

Hereinafter referred to as "the Board". 

3 Hereinafter referred to as "the Commissioners' Court". 

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Honorable Henry Wade, Page 2 (~-4) 

You further state that there is no reference in 

the Minutes of the Commissioners' Court to the meeting or 

minutes of said meeting of the Board at which the resolution was made concerning the improvements. A private 

group of citizens interested in the approval of these bonds 

circulated a brochure setting out proposed purposes and 

"estimated costs" similar to those in the Board's resolution. The voters of the District approved the issuance of 

the bonds. Thereafter an official "Notice of Sale" of 

~these bonds was published which stated that the bond prcceeds would be used "substantiallyN as specified therein and 

set forth purposes and amounts similar to those in the Board"s 

resolution. The bonds were subsequently issued, sold and 

delivered and the proceeds received by the District. 

It now appears that the lowest and best bids for 

constructing certain of the specified improvements will 

exceed the amounts previously contemplated. You ask: 

"In light of the stated fact situation, 

may the Dallas County Hospital District 

use a greater amount of bond proceeds than 

are earmarked for a listed project even 

though this may cause a shortage of funds 

for the later projects on the list of improvements?" 

It must first be determined whether there were 

valid designations upon which the voters could rely as to 

the particular improvements to be made and the amount to be 

spent on each. Once valid designations have been made and 

relied upon, they cannot be ignored or repudiated without 

perpetrating a fraud or its equivalent on the voters. 

Black v. Strength, 112 Tex.188, 246 S.W. 79 (1922). All 

valid pre-election orders, and not only the voted proposition, must be considered in determining whether there has 

been a valid designation. There must be compliance with 

all valid pre-election orders to insure that the electorate 

will receive the benefits expected at the time of the election. Thaver v. Greer, 229 S.W.Zd 833(Tex.Civ.App. 1950, 

error ref. n.r.e.). See also Moore --. v. Coffman, 109 Tex. 93, 

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>k, 

Honorable Henry Wade, Page 3 (~-4) 

a, 

200 S.W. 374 (1918) and Fletcher v. ~lv, 53 S.W.Zd 817 

(Tex.Civ.App. 1932, error ref.). Where the proceeds of 

a bond issue are designated for a particular use or uses 

either in an order calling a bond election or in a contemporaneous order, then such order or orders must be 

treated as a contract between the governing body, the 

Commissioners' Court in this instance, and the electorate. 

Wriqht v. Allen, 257 S.W. 980 (Tex.Civ.App. 1924, error 

ref.). Under the facts submitted, the only order entered 

by the Commissioners' Court was the order calling the 

election which clearly did not make any designations regarding the use of the bond proceeds. 

The District was created pursuant to the provisions of Article 4494n, V.C.S., which authorizes the Commissioners' Court to issue bonds for the purposes set forth 

in the proposition which was submitted to the voters. Under 

Section 3 of Article 4494n the Commissioners' Court may call 

a bond election on its own motion or it shall call an election at the request of the Board. 

Since there was no specific designation by the 

Commissioners' Court regarding the use of the proceeds of 

the bonds in question, it must be determined whether the 

Commissioners' Court was acting at the request of the Board 

in calling the election or in any way adopted or ratified 

the Board's resolution in the pre-election proceedings. 

Under the submitted facts, the Commissioners' court did not 

refer to the Board's resolution to request the Commissioners' 

Court to call an election in either the order calling the 

election or in the minutes of the meeting at which the 

election was called. There is no indication in the fact 

statement set forth in your opinion request that the Commissioners' Court adopted or ratified the Board's resolution, either directly or indirectly, prior to the election 

which authorized the issuance of the bonds in question. 

The proposition which was submitted to the electorate asked 

only whether they would approve the issuance of $7,500,000 

of bonds "for the purpose of constructing enlargements and 

improvements to the District's hospital". The Commissioners' 

court did not set forth various projects, or the amount of 

money to be expended on each project, at any time prior to 

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Honorable Henry Wade, Page 4 (K-4) 

the election, although such designation could have been 

made had the Commissioners' Court so desired. Further, 

the Commissioners' Court did not call the election on the 

date mentioned Ln the Board's resolution. In the light 

of the fa'cts set forth in your opinion request we must 

conclude that the Commissioners' Court was acting on its 

own motion in calling the bond election on December 12, 

1964. We accordingly hold that the only restriction 

placed on the District in the expenditure of the proceeds 

from the sale of the bonds in question is that the funds 

must be spent on constructing enlargements and improvements 

of the District's hospital in compliance with the provisions 

of Article 4494n. So long as the funds are so expended, the 

voters are not being deprived of any benefits which could 

have been expected by them at the time of the election. 

See Lewis v. City of Fort Worth, 126 Tex. 458, 89 S.W.Zd 975 

(1936) and Garcia v. Duval County, 354 S.W.Zd 237 (Tex.Civ. 

App. 1962, error ref. n.r.e.). 

Under the facts submitted, the pre-election publicity brochure was never adopted or ratified by appropriate 

order of the Commissioners' Court, and it is therefore 

merely an expression of opinion by those who signed it and 

does not constitute a pre-election promisf by the Board or 

the Commissioners' Court. Conrad v. Pendleton County, 209 

Ky. 509, 273 S.W.57 (1925). Clearly the notice of sale of 

the bonds could not have been relied upon by the electorate, 

as it was published subsequent to the election authorizing 

the issuance of the bonds. 

SUMMARY 

Under the facts submitted, the only restriction placed upon the expenditure of 

the proceeds of the bonds in question is 

that the funds must be expended on constructing enlargements and improvements 

of the District's hospital. 

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Honorable Henry Wade, Page 5 (n-4) 

truly yours, 

JWPJr-s 

Prepared by JOHN W. FAINTER, JR. 

Assistant Attorney General 

AFFROvEDr 

OPINION COMMITTEE 

Hawthorne Phillips, Chairman 

W. V. Geppert, Co-chairman 

Robert Flowers 

Pat Bailey 

Ralph Raeh 

John Reeves 

Staff Legal Assistant 

A. J. Carubbi, Jr. 

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