HonorableMaurice P. Bullock

countyAttorney Peoos county F't.Stocktcn, Texts

Ik2.r Sir: Opinion Number O-2667 Re: Validity of road bondsvoted upon the condition that they he taken ever and assmcd for paymnt by the State,

:Ve have your letter in which cur opinion is requested on the folIow5r.g

state of facts:

"A oonsidernSleportion of the State highwys in Peoos countyore what are generallyknom as uninprwmd dirt roads, end the citizens of Feces County
are desirous of having these State highways Improved and herd surfaced. A plan h&s been suggested to the x?mnty **Comnissj~oners ’**  Courtwhereby an electionmey be called for the purpose, of voting bor.ds

to finance this proposed highway **oCnShW&iCn** and **imprOVement** without the county actually in the long run being burdezedx%th the necessity of levying tares for the pa>mnt of such bonds. Ithas been suggested that the orr?ers

ar.d notices for such electionnight bo so drwm BS to conditiontheir issuanceupon the State Iiiglx%y

Department'susing the proceeds thereof for construction,improvement,etc. of roads in Pecos county 8s State highways, and conditioned furtherupon Eouse El1 688 of the 46th Legislature,Regulm Session, 1X5?, being hereafter amendod **in** suchmnnner as to enthorize the fu13 aswmption by the Strrte of Texas of the psynx%t of all bonds thus issued."

Your q~uestionis:

"Kill a bond j~ssue thus voted and thus limi.ted bevalid, and would bonds thus voted hut issued in violation of said conditions he null and void?"

Although your staterront of facts conton;p!ates the preperetion and passcge of orders and the issuance of not!ce for an election to vote road bonds conditionally,it does not disclose in ooncrete form the propositionproposed to be submitted to the oaalifiedvoters-

HonorableMaurice R. Bullook,page 2 O-2667

for their'action thereon. Under the law there is no inherent right in the people to hold eleotions. Sea ~~llliams vs. Glove=, 259 S. W. 957. Eleotionsmay be held only where authorized by law. In tho voting of road bondswe must look to Article 752a, et seq., Title 22, Chaper 3, of Vernon'sAnnotated Civil Statutes, for the specific authorityto vote and issue them. Itwill be noted that Article 762b provides that the election order and notioe of election shall state, first, the purpose forwhich the bonds are to be issued: seoond, the amount thereof; third, the rate of interest;and, fourth, that ad valorem taxes are to be levied annually on all taxable propertywithin said issuing subdivisionto pay the annual interest and provide a sinking fund to pay the bonds atmaturity. Subsequentarticles detail the steps thatmust be taken preparatoryto voting at this election, and, likewise,prescribes the **manner** of holding same. Other articles under this title prescribe the maturity dates, interest rate and denQnination to which bonds issued thereundermust conform.

We call your attention to the following language appearing inArtiole 762b:

"Upon the petition of fifty resident property taxpayingvoters of any county, the Conrmissionersl Court of suoh county.at any regular or special session thereof, shall order an election to be held in suah oountv to determinewhether or not the bonda of suah county shall be issued for the purpose of the oonstruo- -- -- & operation ofmacadamieed
ore roads and ,$ravei;ed

- -- turnpikes, or% aid thereof * * * ---
In our opinion the underscored language in the above article establisheswhat may be consideredthe statutorypurpose for whioh road bondsmay be issued'andthat the use of such language tends to exclude other purposes, even though related. In other words, the underscored portion of the above quoted statute appears to be the purpose that the Legislature intendedhaving submitted to the property taxpayingvoters of any countywhenever the propositionfor the issuance of road bonds is subnitted to them for their action thereon.

For purposes of this opinionwe must assume that it is your intention to subnit a proposition to the voters of your county containinga purpose phrased at set forth in Article 752b, hereinabove underscored,and in addition thereto it is planned that the orders and notices, as well as the petition, shall provide that in the event the bonds are authorized the proceeds thereof shall be used only for the oonetruationand improvementof State highwayswithin the county and then only in the event that House Bill 666, Forty-sixthLegislature, Regular Session, 1939, is so amended as tomake such bonds 10% eligible for partiaipation in the State gasoline tax fund allocated to the Board of County and DistrictRoad Indebtedness. Re feel it necessary to restate your proposition in order that our answer shall- -

HonorableMaurice R. Bullock,page~3 O-2667

be deer. This question differs from the problem presented in the Moore VS. Coffman case, 200 S. A. 374, wherein the general rule is stated that the purposes for issuing bonds stated in the petition, order and notice of the election determines for what purposes the bondswere,issued, and that the voters have no right to rely upon any other state@nt or order for ascertaining the purposes for which bonds are to be issued. In the instantmatter theconditions are made a part of the petition, ordar and,notice,.,and, therefore,become without question a part of the electionproceedings, and ,inview of the languageused by the Supreme Court in.the above,.mentioned Moore vs. ?Xffman ease,we think,that a c;on<ition might properly.be inserted in the preelection orders. We quote the following frora the opinion in that case: ,,

"That any Commissioners'Court in Texas is within its legal rights in annexing a condition in its preelection orders which fixes the exact purpose for which the bondmoney constituting the proceeds of
a bond.issue sul-mitted to a vote is to~be used."

Inview of the foregoing quotationwe think itwould not be unlawful to annex the further oondition that the,bonds shouldnot issue except upon the happening of somenamed event. The result thus obtainedwould have the effect and foroe of a contract. See,Blackvs. Strength, 246 S. W. 75; 19 RCL, pages 1163 and 11641 Roane County Court ~6. O'Brien, 122 S. E. 352 and 355; also Fletchervs. Ely, 53 S. W. (2d) 817 (WritRefused)4 We, therefore, concludethat if the bonds
are voted for the straight statutorypurpose, that isa "for the construction,maintenance and operation ofmaoadamizad, graveled or paved roads and turnpikes, or in aid thereof," that the proceeds be used for the constructionof State designatedhighways, and that the issuance thereof'

is conditionedupon House Bill 688 being mended in amanner so as to permit the participation of such bonds to the extent of 10% in the,Stete gasolj~ne tax fund allocated to the Board of Countyand CistriotRoad Indebtedness,that suoh bondswould not be rendered ipso factovoid because of the inclusion of suohnamedcondition in the proceedings. We conclude further that without the happening of the last stated contingencythe bonds couldnot be lawfully issued.

It seems clear from your letter and statement of facts that the prinoipal thought underlying thiS suggestedmethod of voting and issaing road bonds is that House Bill 688 shall be amended in such
manner as to permit the "full assumption" by the State of the payment of all bonds thus issued. If this were not possible it is reasonable to assume that the property taxpayingvoters of your countywould perhaps react unfavorably to the authorization of further debt for road constructionwithin, the oouxty. We think it advisable to call your attention to the following language appearing in the present "Road Bond Law!',commonlyknoTI es T1ouse Bill 688, Section 8 thereof reading, in part, as fOllOWs:- -

HonorableMaurice R. Bullook,pge 4 O-2667

"No provision of this Aet shell be construed

. . . . to pledge the credit of the State in any mannar whateverfor the payment of any of the outstanding road indebtednessherein referred to of the county or districts of the State. It is hereby declared that all eligible indebtedness,es hereindefined, shall remain indebtednessof the rsspeotive county or defined road districtnhioh issued it, and said counties or defined road districts shall remain liable on said indsbtedness aacording to its term8 and tenor3 and it is not the purpose or intention of this Act or any prt hetoof to obligate the State of Texas direotly or indirectly or contingently for the payment of any suoh ObligatiOns,or that the State of Texas should assume the payment of said obligations,and this Act is not to be construed
es obligating the State of Texas to the holders of any of said obligations to make any payment of the same of any pert thereofl nor shall suchholders have any right to enforce the appropriationof any of the moneys hereinabove provided for; nor shell any provision **hereof** constitutea oontraot on'the part of the State to make money available to any oounty'forthe oonstruotionof edditional lateral roads, but the provisionshereof are intended solely to compensate, repay and reimburse such oountiesand diatricta for the aid end assiatenoe given to the State in furnishing,advancing and aontributing money for building end conatruotingState highways end lateral roads * * *".

It till be seen that Rouse Bill 688, end its predecessors, have been and are nothingmore then appropriation bills. Biennially the Legislatureappropriates one-fourth of the gasoline tax to the credit of the County and Road Distriat Highwey Fund to be used for the purposes speoifioally set forth in the Aot. Se&ion 6, subsection (j).ofHouse Bill 688, oonstitutesthe appropriation clause of the dot. The constitutionelityof this Aot would ba seriouslyquestioned if the terms thereof should contemplatea pledging or en appropriation of one-fourthof the gasoline tax to the purposes defined in the Act for
a period of longer than two years. Seotion 6, Artiole 8 of the Constitution,reads, in pert, as follows:

"Nomoney shall be drawn from the treasury but in pursuance of specificappropriationmade by law; nor shall any appropriation of money be made for a longer term than two years * * *'.

It seems olear that any amendment to the presentRoad Bond Law which would contemplatethe "full assumption"by ,theStats of the payment of all bonds issued in aooordanoewith the suggested plan would be unconstitutionaland at once the condition sought tobe imposed by thevoters of your county losesmuoh of its force. Under the termsO-2667

of '~!o:isc

?'?I. 688 the road bonds of the various countiesupldor~ert~:i condition5 become eligible for participation in the funds sccruir,rS tllT the Board of Countyand i&strictRoad Indebtedness,and so long as such funds accn.~e

tothe Eoard through the collection of gasoline ta~nx and the subsequentappropriationby the Legislature,the principal a::o interest of bondsmade eligible for participation can be legally paid by the Powd to the extent the funds on hand available for that purpose will apply. 'Tie

quote the following significant language from subsoctior:!g) of Seotio-. 6 of House aill 686:

"in the event the amount so estimated to be applied to the payment of eligible obligations for any coun%y or defined road distrjct is sufficient to meet aS1maturjng interest,principal and sinking fund requirements,the Commissioners %ourtmay dispensewith the collectionof ad valorem levies for such calendaryear for such interest,pr,inoipal. or sinking fund requirements. In the event the amount of payment so estimated to be applied is not suffi~cient

tomeet thematuring interest,principal and sinkjng find requirements,the County Commissioners' Court shall collect from taxes cn the property in said respective countiesand defined road districts
an amount of money equal to the differencebetween tile *mount of such requirementand .theamount available for application."

Ihis subsectionfurther provides t2la.t in the event the r.- r;,o!zt of finds available for application to meet ,the maturing interest., prj,ncipel

aud sirking fund roqu.irement8 in eny yecr is aot sufflcien*. to sa,tisfy

such requirement,then the funds shall he prorated I~:: tl-r ma:inerpresorj~bed therein. In otherwords, this and foregoingquo'tltions, p?sinly and forcefully operate against the "full assumptior" sy the State of any bonds.

It is entirely possible that House Bill 686mi&t be so amended by the next session of the &gislature as to permi.t of a fuZI participation 1:::

bonds of the type sought to be voted in your county, tn:t there can he no guarantee that succeeding legislaturewill reennct laws and make sufficientappropriationsto provide for the f'lil' ~ayxer!?;

of such bondsprjor tomaturity thereof; and as can be seen from the above quoted portion of the existingAct, any time in the future that there may be an insufficiencyin the fund to meet the maturitrg principal and interest in any year, it immediatelybecomes the duty of the Commissioners'Court of the county to levy a tax in such wn amount aswill provide the additior.al sum necessary to promptly pay thematuring interest and principalwhen due. In otherwords, the oUig&tion, of necessity,must remain the primary obligation of the countyvoting the same, and the property of the taxpayers of said cou,~ty remains liable to taxation in suchproportionRS is r,eoesscry tomake up the insufficiencyof the gasoline tax fund. it is spparem.ibnorubleMaurj~ce H. Bullock, prlgo

6 O-2667

that thsrc cm be no legal 'assumption"of tho bonds. 'IYe bonds b~cme eligible for participation it? the fund and to the extent funds W-A aTai.leb1.e

to meet that perticipatiol: each bend stands on a par3tywith a?1 other bondsmade eligible for participation.

:nview of the foregoj.ng we reach tho ccmalusion the,t. a road bond electionwould be renderedwholly ineffective if the ultimate issuance of such bondsWRS oondi~tioned upor 6,"full assumption" of the payment thereof by the Sixte. iImwer, this would not be true if the arwoxed condition contemplntes end prcwidos nnl,yfor the issuanno of such bondsupor! a change beingmada in the prest:.nt law permitting them to partic?pate to the extent of'lOO$ i:?the @soLine tsx funds allocated to the Roard of County and C5strir.t Road Indebtedness, 6 "fu',.l Issumpticr:" couldmoan nothi~ngless than an absolute ivl'.ease of the county from any liability cr obli~gatiop to pay such bonds, and this, se believe, couldnot be done under the present Constitution.

Te concede tha~t.

.tteirmnedixte?y

foregoingdiscussion is no,t necessary to a proper dotarrniflrttlcn of the qxestiorr

propow~dsd in your letter, but in view of the widespreadmFainterpretationas to ,the extent of the obligation of tho State uider the ,tenr.s of Eouse Eil:L 688,we +&irk it necessary to give you ,the bwofit of cur views as to the ultimate effectivenessof the present law and as to the likelihood of a subsequentAct bsi~ng passedmak5r.g

possible a more bir.ding "assurrpticn".

Trusting that the foregoing satisfactorilya~~swers your inquiry,we are

'T&y sL Clarence 5. Crow3 Clarence i. Crcwe

Assis.tant