### THE op TEXAS

Hon. JamesB. Pattison, Chairman Committee on Public Health House of Representatives 52118Legislature Austin, Texas Opinion Ho. V-1163 Re:

Bear Mr. Pattison: Const?.tIltionality of ccanmittee amendmentto HouseBill 151 to establish a scholarship program of loans from State PunUsto mealcal students. Your request for an opinion relates to the constitutionality of a lawnowIn effect in the State of Mississippi which provides for loans andscholarships to students desiring to study medicine.

You state that HouseBill 151 Is nowbeing considered byyour committee andthat you contemplate substituting in lieu thereof the Misslsslppl plan, which for the purposes of this discussion is designated as House Bill 431. You desire to knowthe constitutlonalltg of such a lawunder the Texas Constitution.

HouseBill Ao. 431 (Mississippi) provides for the creation of a board to be knownas the State f+Iedfcal Education Board andprovides for the appointment andthe terms of office of the membersthereof. Theact provides for the employment of the neoessarg personnel to carry out the terms of such act andprovides a procedure for granting loans or scholarships to students whoare bona fide students andresidents of the State of Mississlppl andwhodesire to become physicians. Thepurpose of the loan is to enable anapplicant to obtain a standard fouryear medical eclucation which will qualify such applicant to become a licensed practicing physician andsurgeon. Applicants mayreceive a 

### loan or scholarship in an amount not to exceed 5,000.00, to be paid in annual installments not exceeding D

1250.00 per annum. These loans or scholarships are conditioned so that the full amountshall be repaid to the State of Mississippi, with four per cent Interest from the date of each payment by the State. 

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Hon. JamesB. Pattison, page 2 (V-1163)

Section 9of the proposed HouseBill 431 pro-

. a vides that all payments of funds for loans 

### or scnolarships thereunder shall be madeby requisition of the Board signed by the ChairmanandSecretary, and directed to the Auditor of Public Accounts, whoshall thereupon issue awarrant onthe Treasury of the State of Mississippi for the amountfixed in the requisition and payable to the person designated thereon, which warrant upon presentation shall be paid by the treasurer out of anyfunds appropriated by the Legislature for the purposes provided for under this act. Thepurpose andintent of the act was to meet the emergencyexisting in the State of Mlssisslppi from the shortage of doctors in the State by Increasing the numberof medical students from Mississippi in the various medical schools andinducing such graduates of medical schools to return to Mississippi for the practice of their profession.

Youhave informed us that the adaptation of the Mississippi plan as a substitute for HouseBill 151will provide for anappropriation of State funds by the Legislature. Thequestion presented for determination is whether the proposed bill contravenes the p~ovlsions of Section 50of Article III of the Constitution of Texas, which provides:

‘The Legislature shall have nopower to give or to lend, or to authorize the glving or lendlng, of the credit of the State in aid of, or to anyperson, association or corporation, whether municipal or other, or to pledge the credit of the State in anymanner whatsoever, for the payment of the liabilities, present or prospective, of any individual, association of individuals, municipal or other corporation whatsoever.” In Sannock County v. Citizens Bank&Trust Co., 53Idaho 159, 22P.2d 674, 680 (19X), the SupremeCourt of Idaho was construing the provisions in the Idaho Constitution which said that no couutx shall “lend, or pledge the credit or faith thereof or “loan its credit” to anylnalviaual, association, or corporation. The

court stated:

"In interpreting the sections of the Constitution in question, the language employed must be taken andunderstood in

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Hon. JamesB. Pattison, page 3 (V-1163)

its natural, ordinary, general, andpopular sense. In the popular sense, lending or l&&L& moneyor credit is at once understood to meana transaction creating the customary relation of borrower and lender, in which the moneyis borrowed for a fixed time, andthe borrower promises to repay the amountborrowed at a stated time in the future, with Interest at a fixed rate. Andthat is the sense, then, in which the language employed in those sections must be unaerst00a, and so understood, no county, for example, shall lend or pledge its credit or faith, directly or indirectly, or in anymannerwhich would create the customary relation of borrower andlender." It is our opinion that the expenditure lnValved in the plan under consideration creates the customary relationship of borrower and lender andis therefore a lending of the State's credit within the meaning of Section 50of Article III of the Constitution of Texas.

In construing the provisions **of** Section 50 andkindred provisions found in Sections 51and 52 of Article III of the Constitution, the courts of this State have held that the Legislature is prohibited from authorizing the lending of credit or the making of arants which are not for a nubllc. OF aovernmental. purpose. Bexar County v. Linden, 116Tex‘: 339, 220S:W. 761 (1920); RoadM t 19 0. 4. Shelby Countyv. Allrea, 115S.W.2a 702 (Tex.Clv.App. ?$3 123Tex. 77, 68S.Wy2; 164 (1 4 ; Seydler v. B order,

, error ref.). If the expenditures are for a pubiic purpose, they are not lnvalid because private persons are benefited therefrom. Alameda County v. Janssen, 16Cal.2a 276, 106P.2d 11, 50ALR 1141 (1940) However, the carrying out of a gov&&ntal fun&Lo: mustbe the primary object of the grant of credit. Wherethe expenditure is dlrectly In aid of an individual In his private affairs and results in a benefit to the public only indirectly, it is not madefor a public purpose.

Certainly the preservation and promotion of the health of the citizens of the State andthe eaucatlon of physicians are matters of public concern. But House Bill No. 431 goes far beyond the providing of instruction andtraining for physicians. Wecannot escapeHon. James. B. Pattison, page 4 

### (V-1163)

the conclusion that the direct benefits of this bill are conferred upon the individuals whoare the recipients of the loans, and that the benefits to the public, in the absence of an emergency not hers presented, are too indirect to bring it within the orbit of a governmental function.

Wehave not found any decision in this State in which the question of the constitutionality of loans to individuals for .ananalogous purpose waspresented. In several States, the courts have held statutes authorizing loans to individuals to be unconstitutional, even though the Legislature had enacted the statutes in aneffort to promote the general welfare. Onthe other hand, the courts of someStates have taken a broader view of the scope of public purposes andhave upheld loans andgrants to individuals in various circumstanaes where the court thought the Legislature was justified in considering the public good benefited thereby. However, webelieve that the decisions of the Texas courts in other situations indicate that the meaning of public purpose cannot be broadened to this extent.

This office, in holding that there wasno statutory authority for the creation of a student loan fund out of funds appropriated to the Texas State Univemitg for Negroes, stated that the presence of such statutory authority would raise serious constitutional questions, In view of Section 50 of Article III of the Constitution. LeeLetter Opinion to W. R. Banks, dated June 

### 3, 1950.

Whena proposal for making loans to World War II veterans for purchase of land wasbefore the Legislature it wasapparently deemednecessary by the Lagislature to amendthe State Constitution before such loans could be made. It is our opinion that a similar constitutional amendmentwould be necessary in order for the %llssissippi Plan” to be valid in this State. SUMMARY The “Mississippi Plan” providing for loans from State funds to students aesirlng to study medicine cannot be validly adoptedHon. JamesB. Pattison, page 

### 5 P-1163)

bythe Legislature in the absence of a constitutional amendmentspecifically authorizing such plan.

APPROVZD: J. C. Davis, Jr. County Affairs Division Jesse P. Luton Reviewing Assistant Charles D. Mathews First Assistant BWzmw Yours very truly, PRICEDARIEL Attorney General

Bs Burnell Waldrep Assistant