### IEXEA~~TORNEY GENERAL

OF TEXAS

Honorable W. M. Tucker County Attorney Collingsworth County Wellington, Texas

Dear Sir: Opinion NO. 

### o-2376 RE: Liability ofcounty treasurer for school funds overwhich treasurer does not have control - Investment of school funds.

Your request for oplnlon has been received and carefully considered by this department. We quote from your letter ofrequest as follows:

"QuestionNo. 1. Where County School Superintendent used public school fund8 for the purchase ofbonds, where said County School funds are handled Independently by the County School Superintendent, and said funds d,oesnot pass through the hands of the County Treasurer should there be a shortage in the County Superintendents account or if saidbonds should beworthless, ordefective inany manner, would the County Treasurer, the saidViola Hudson, be liable under her official bond forany such shortage, ordefects in saidbonds sopurchased by said County School Superintendent? Under Art. 1704R.V.S.
"Question No. 2. Is the County School Superintendent authorized to invest the Public School funds inbonds, without the sanction of the CommFssioners Court ofhis County, when said school fund iscarried lnthe School Depository, and handled exclusively by the County School Superintendent independent of the County treasurer."

We understand from your letter that Collingsworth County has aduly selected and qualified county depository and that the school funds are in said depository.

Article 1704, Revised Civil Statutes of Texas, reads
as follows:

"The county treasurer before entering uponHonorable W. M. Tucker, page 2 o-2376

the duties of his office, and within twenty days after he hasreceived hi8 certificate of election, shall give abond payable to the county judge of his county, tobe approved by the commissioners court, in such sum as such Court may deem necessary, conditioned that such treasurer shall faithfully execute the duties of hi8 office and pay over according to law all moneys which shall come intohis hand8 as county treasurer, and render a true account thereof to said~court at each regular term Of Said court."

Article 3942, Revised Civil Statutes ofTexas, reads a8 fOllOWS:

"The treasurers of the several counties shall be treasurers of the available public free SChOOl fund and al80 Of the PerItIanent COUnty School fund for their respective counties. The treasurers of the several counties shall be allowed for rnceivingand disbursing the school fund8 one-half of
one per cent for receiving, and one-half of one per Cent fordisbursFng, said COIImIiSsiOhs t0be paid out of the available 8ChOOl fund of the county; provided, no commis8ion8 shall be paid forreceiving the balance transmitted to him by his predecessor, or for turning over thebalance inhis hands to his successor; and provided, that he shall receive no commLssFons onmoney transferred."

Article 2828, Revised Civil Statutes ofTexas, read8
as follows:

"The terms 'county treasurer' and 'county treasury' as used inall provisions of law relating to 8ChOOl funds, Shall be construed tomean the county depository. The commissioners court shall filewith the StateDepartment ofEducation
a copy of the bond of saiddepository to cover school funds. No commission shall be paid for receiving and dlsburslng school funds."
Article 2829, Revised Civil Statute8 of Texas, read8 FL8fOllOW8:

"WithIn twenty days after the receipt ofa certificate of its selection, the CountyDepository shall execute a good and Sufficient bond, payable to the County Judge, inamount equal to. .

Honorable W. M. Tucker, page 3 o-2376

the probable amount ofavailable School Fund, which may be ondeposit at any one time, and of the,permanent County Fund, tobe estimated by the County Superintendent, and shall be conditioned that thedepO8itOry will faithfully perform itsduties under this title, and safely keep and faithfully disburse the School Fund according toLaw, and pay 8UChwarrants asmay bedrawn
on Said fund by competent authority; provided, in lieu of Said bona, such depO8itOry may secure Said School Fund8 inthe samemanner a8 isnow provlded by law for qualification a8 CountyDepository.

"Sec. 1-A. In the event depositories have been Selected at the time ofadoption of the above provision, suchdepO8itorieS may, at option, secure Said School Fund byapproved securities other than bypersonal bona."

Article 2549, Revised Civil Statute8 ofTexas, read8 a8 fOllOW8:

"As soon as Said bond be given and approved by the Commissioners Court, and the Comptroller,
an order Shall bemade and entered upon theminutes of Said Court designating such banking corporation, association or individual banker, as adepO8itOry for the fund8 of Said county until Sixty (60)days after the time fixed for the next selection ofa depO8itOry; and thereupon, itShall be the duty of the county treasurer of Said county ltnmediately upon themaking of 8uCh order, to transfer to Said depO8itOry all the fund8 belonging to said county, a8well as all funds belonging to any district or other municipal subdivision thereof not selecting it8 owndepOSitOry, and immediately upon receipt of any money thereafter, todeposit the samewith SaiddepO8itory t0 the credit Of Said county, diStrict and municipalities. It Shall al80 be the duty of the tax collector of such county todeposit all taxes collected by him, or under his authority, for the State and 8UCh county and itsvarious di8triCts and other municipal subdivisions, in suchdepository ordepositories, as soon as collected, pending the preparation of hi8 report of such COlleCtion and settlement thereon. The bond of such county depository ordepositories Shall Stand a8 security for all 8UCh funds. Upon such fund8 beingdeposited as herein required, the tax collector and sureties on hisbond, shall thereafter beHonorable W. M. Tucker, page 4 

### o-2376

relieved ofre8pOnsibility of its safe-keeping. All county depositories shall collect all checks, draft8 and demand8 formoney sodepOSited with them by the county Andywhen using due diligence Shall not be liable on 8UCh collections until the proceed8 thereof have been duly received by the depO8itory bank, provided that any expense incurred incollection thereof by thedepOSitOry, which thedepO8itory isnot allowed orpermitted topay orabsorb by reason ofany act of Congress of the United States orany regulation by either the Board ofGovernors of the Federal Reserve System
or the Board ofDirectors of theFederal Deposit Insurance Corporation, shall be charged toand paid by the county. All money collected or held by any district, county orprecinct officer in such county, or the officer ofany defined district or subdivision in 8UCh county, including the fund8 ofany municipal orquasi-municipal subd,ivision or corporation which ha8 the power to select its owndepository, but hasnot done 80, Shall be governed by this law, and shall be deposited in accordance with itsrequirements, and shall be considered in fixing the bona of 8UChdepOSitory, Andyshall beprotected by 8uCh bona; and all warrants, checks, and VOUCher8 evidencing 8uCh funds Shall be Subject to audit and countersignature as now or hereafter provided by law."

Article 2557, Revised Civil Statutes, reads as fol1OWS:

"Thecounty treasurer shall not be responsible for any loss of the county fund8 through the failure
ornegligence ofany depository; but nothing in this Act shall release any county treasurer for any 1088 resulting from any official mi8COndUCt or negligence
on hi8part, nor from any responsibility for the funds of the County until adepO8itOry shall be selected and the fund8 deposited therein, nor for any misappropriation of such fund8 by him."

Article 

### 2663,Revised Civil Statutes, read8 a8 fol1OWS:

"Onthe first of eachmonth, the State Superintendent shall prorate to the several counties, cities and towns and 8ChOOl district8 constituting separate school organizations, according to the scholastic!population of each, the available school. .

Honorable W. M. Tucker, page 5 

### O-2376

money collected during the preceding month and then on hand as shown by the certificate issued that day to himby the Comptroller, and Shall thereupon certify to the Comptroller the total
sumprorated to each; and such certificate shall be authority for the Comptroller todraw his warrant in favor of the Treasurer of each such county, city or town or 8ChOOl district for the amount stated in Such certificate. He shall receive from the State Treasurer all warrant8 80 drawn, and Shall transmit suchwarrants to the respective treasurer in favor ofwhom they are drawn."

The term "treasurer" clearly mean8 a8 USed inArticle 

### 2663, supra,

"countydepository." SeeArticle 2828, supra.
This department held inan opinion written byHan; Scott Gaines, Assistant Attorney General, dated June 9, 1931, addressed to Mr. S.M.N. Marrs, State Superintendent, that a county depository being selected, 

### 2829and approved, bona furnished under Article said bank as Selected beCOme8 the depository for all school fund8 of Said county, lncludlng State and county available 8ChOOl fund and permanent county SChOOl fund. This opinion held further that the CUStOdY ofbonds and other securities a8 investment8 ofpermanent school fundwill be with county treasurer and that 8UCh responsibility was covered by the county treasurer's general bond.

We callyour attention to the following language, found Inthe footnotes under Article 

### 2828,Vernon's Annotated Texas Civil Statutes, Vol. 

### 8,page 

### 298, to-wit:

"UnderConst. Art. 

### 16, 0

### 44,providing that the Legislature shall prescribe the duties of the county treasurer, who shall have such compensation as may be provided by law, theLegislature, notwithstanding this article, had power t0pass Act 318t Legislature, c. 12, transferrlna the custody of such fUnd8 to the county dePOSitOrie8, thus relieving the countv treasurers of am liability for such fund8 80deDosltea.... citing Horton vs.Rockwall County, (Clv.App) 149 SW 297.'I (Underlining ours)

The case ofHorton vs.Rockwall County, Supra, holds that the county treasurer isnot entitled to a commission for receiving and disbursing 8ChOOl funds. The following language of the court inthat case,pertinent toyour inquiry, 18 called toyour attention, to-wit:. .

Honorable W. M. Tucker, page 

### 6 o-2376

"Pursuing this policy and for the purpose of further conserving and increasing the school funds particularly, the amendment to the public free school lawswas passed, bywhich themanagement and control of thedistrict schools were placed squarely inthe hands of'cheschool trustees, including the disbursement ofall funds raised by the issuance ofbonds for thepurchase of sites and the building of schools, with the additional provision that on funds raised for such school purposes no commission should be paid for receiving and disbursing same for the obvious
reason that since the safety of the fundwas secured by thedepository and the labor and duty of disbursing itrested wlih the school trustees,2 would be aneedless expense and but curtail the school fund topay an officer forreceiving and disbursing same,when hewas charged neither with its safe-keeping nor liable for its loss ormisappropriation." (Underlining ours)

The case ofBaxter, County Treasurer, vs.Rusk County, 11 SW 2nd 

### 648, follows and supports the case ofHorton vs. Rockwall County, supra.

You are therefore respectfully advised that it is the opinion of this department that the county treasurer Isnot liable under the treasurerlsofficial bond for shortages in school funds overwhich the treasurer exercised no control and which have been legally and properl~ydeposited intheduly authorized and properly bonded county depository, inthe absence of official misconduct ornegligence on the part of the treasurer and inthe absence ofany misappropriation of such funds by the treasurer. The complete facts in each case will determine the liability in each case.

We are not furnlshed with enough facts relative to the matter ofdefects orworthlessness of the bonds and surrounding facts to pass upon the question ofthe liability of the treasurer, ifany, in those matters.

With reference toyour second question, we assume that by the term "public school funds" you refer to the investment of the permanent county school fund.

Section 

### 6,Article VII, Texas Constitution, reads as follows:

"All lands heretofore, or hereafter granted to the several counties of this State for educa-- . c

Honorable W. M. Tucker, page 7 O-2376

tional purposes, are ofright the property of said counties respectively, towhich they were granted, and title thereto isvested in said counties, and
no adverse possession or limitation shall everbe available against the title ofany county. Each county may sell ordispose of its lands inwhole
or inpart, inmanner tobe provided by the Commissioners1 Court of the county. Actual settlers resldlng on said lands, shall be protected inthe prior right ofpurchasing the same to the extent of their settlement, not to exceed one hundred and sixty acres, at theprice fixed by said court, which price shall not include the value of existing improvements made thereon by such settlers. Said lands, and the proceeds thereof, when sold, shall be held by said counties alone as a trust for the benefit ofpublic schools thereln; said proceeds tobe invested inbonds of the United States, the State ofTexas, or counties in saidState, or in such other securities, and under such restrictions
as may be prescribed by law; and the counties shall be responsible for all investments; the interest thereon, and other revenue, shall be available fund." except the principal

Article 2824, Vernon's Annotated Civil Statutes of Texas, reads as follows:

"Each county may sell ordispose of the lands granted to it for educational purposes in suchmanner as may be provided by the commissioners cour~tof such county, and the proceeds ofany such~sale shall be invested inbonds of theUnited States, the State ofTexas, the bonds of the counties of the State, and the independent or common school districts, road precinct, drainage, irrigation, navigation and levee distrI.ctsin this State, and the bonds of incorporated cities and towns, and held by such county alone
as a trust for thebenefit ofpublic free schools therein, only the interest thereon tobe used and expended annually."

The case ofBoydstun VS. Rockwall County, 24 SW 272, holds among other things, that it is the duty of the commissioner's court to invest the county permanent school fund. This case also holds that the commissioners court may ratify
an act of a county judgewho without authority purchases bonds with the school funds.Honorable W. M. Tucker, page 8 

### o-2376

This department has repeatedly held that the power and duty to invest the county permanent school fund is in the commissioners' court.

Your second question is therefore answered in the negative.

Very truly yours

ATTORNEY GENERAL OFTEXAS

BY s,fWm.J.Fanning Wm. J. Fanning Assistant

WJF:AW:wc

APPROVES JUNE 

### 7, 1940 s/Grover Sellers FIRST ASSISTANT ATTORNEY GENERAL
Approved Opinion Committee By s/BWB Chairman