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OFFICE OF THE ATTORMEY GMTMRAL OF PEXAS Y
AUOTIE

GROVER SELLERS
Attorngy General

Monerediec 3B. ¥. Jenee, President
Texea Cellege of Arte and ladustriecs
Kingsville, Texse

Dear sir Opinion Se. 0-6753

Ret Whether gurplus neney in dont fund
for retiraent ef reveme bonds ioe
eued by the Texas Oellege ef Arts
ané Industries cam be invested in
Series F Gevernment Jonis,

Ve have your epinion request reading ee follows:

"1 shall appreciate heaving your ruling won the
legality of the Texas Gellege ef Arte ant Industvios!
purchasing Series F Government Bonds vith a eurples
whieh hae developed in the bond fund, according to
the contract of Mareh 15, 1940, between the Collage
and the Werthveatern Mutual Life Insurance Company
ef Milwaukee,

"A transcript of the contraet is on file in the
State Comptrelier's Office. Rr. 3. 8. Zmersen of
Bmerseon & Company, Capital Metional Beak Building,
dustia, will be able te give you a Weekgrount fer
thie request. Basically, £4 ie that a considerable
eum hae agoweuleted in the bond reserve, vith the

wogedt ‘thet £0 te lving idle mé scceuing a0 inter

Spgoewding te information received fren ir, In-
eroon, it is ay underetanding that the incurance eon.
pea hee neo reservations concerning the purchase of
Serics ¥, Dents, vhiech ef course would de immediately
piseed in the bead fund reserve, previding there is
nothing in the comtragt which would be legeliy tate
preted as preventing euch agtion.*

Tow inquiry raises tve questiess. PFiret, whether the
vend sontract between the Texas Gollege ef Arte sn! Industries ant
the FSorthveetern Mutual Life Ineuranse Company mthorises eF pre-
Midite the investment ef the ainking fund for its revemme bends ia
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<div class="ocr">Rencorabie RB, R. genes, pace &

teries ¥ Government Jontis. Seeond, if the bend contract is silent
i Ge questi whether the Beard of Direeters of the dollege vould
have the df fon wiher their general ctatubery povers te unke the
tuvestnent. Ve perecive thet it om make ne 4ifference that the
propeced investacst ie in United States Sovernnent Beats, rather
than municipal or ether type of bond, if acither the contract sor
the statutes preeeribe the fern ef the investment.

Beotien 3 of the dead transeript, passed ty the Beard of
Regents of the College ef Arts and Industries on March 30, 1940,
eovides thet the interest on said bonis shell Be four per cent
tes) per annum, payable on Mareh 15 and September 15 of each yosr.
Said seetion alee sete out the masurity dates of the whele iseus
ef tonds.

Seetien 11 of said bond transcript provides es follows:

ad The amount ef revremes te de paid
iute t Oy purrasat te the retairenent of the
Last ebeve section shell equal mot lees than ¢78%,67
per moath for the senthe ef Karoh te Angust 1940, both
imelusive, ond shall equal not lees than 61225 per
meth fer cosh nenth thereefter. In the event that

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<div class="ocr">Hoan, 3. 3. Jones, Pege 3

fo aed i . ty a ee Os
- oon iekerest 08 sels baw rv)

AAe WHER ‘VES: ‘ at Po sacust tulty
waffieient te poy all interest on ant the pri
of any eutatenting venls feeusd hereunier te deceme

due thevesdter, a0 further cums naed te be pold inate
the eaid Bent Fund,*

rene

fhe foregoing previcions ef the bond contract give the
Boaré ef Directors of Texas College of Arte ané Industries ne
aathority te invest any ef the money in the Bent Fund. [4 is cur
opinion alee that the uaderscered language of euch eostract pro-
Mbite any iavestuent of such moneys.

fhe statutes are silent om the subject of investuent
ef the sinking funds ef revenue boats. fazas Colleges and Uni-
versitics are axthorised waler Articles 2603e ant 2909a, Versca's
Annotated Civil Statutes, to teens euch vende for the purpese of
acquiring or eonctrosting certain named eollege Duildings. The
governing board of the iswuing fastitubion fe given bread dis-
eretion "in fixing the fors, eontitions end details ef such beads
or notes." see. 3, Art. 26030; See. 3, 2909a. Your Beerd of
Directere would have been sutherized te provide in your ceatract
with Horthvestern Matual Life Insurance Gempeny that 14 might in-
veat the Sinking Punl for the rereme beanie oF pert thereof ia
Government Segurities, Lever Oelorade River stherity ve, Chenieal
Bank ané Frust Oo., trustee, 185 5. ¥. (mi) SAX. Phe Board's dis.
cretion fn eush matters is, however, not unlizited. The buildings
which are purahased with the proceeds of the reveme bone ave
Sowned and held by the on preperty of the State, The build
duge are public property anf are exeupt fren taxsticn. faa Antonie
Indepeatient Sehoel District ve. Vater Verks Board ef frastecs, of
al, 120 8. V. (a4) 661, erver refuse. Fhe fast thet the toads
are payable solely frem the revenuce from the Wuildiags purehased
anf conetivate no liability of the State the scheel, doce aot

the lose %
ee

»

or
nake the nokeys eotlected for retirenent of

vesters, They are in contrel 4 ond
with public funds. They eaeapy & quaci-cfficial position. W Tex.
dur. S73. Shey could not anter inte contraste whish ere agninst
publie peliay. 3% Sex, gay, 453, We. Vo Believe thet o scatrect
authorising euch boards te invest in goverment bonds vould de
valid, Ve hove seen, hoverer, that the eontrect involved here
econtaing ao each authority bat, te the contrary, limites the we

of the money in the Bond Pun to the payment of principal ead
interest.

z
e

ita tase A maae a
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