A
Opinionconstruingand~holding:
1. That a commissionerscourt,doesnot have the authorityto enter into an agrementeitherin or out of court to acoept refundingbonds bearinga lower rate of interestin lieu of bonds held in the PermanentSchool B&d of the county.
2. That a commissioners'court-doesnot hare the authorityto enter into an agremsnteitherin or out of aourt to acaept a discountof past due interestaocruedon bonds held in the PermanentSchoolFund of the county.
July 14, 1939
HonorableE. A. I'Wxon GountyAttorney Crosbycounty Crosbyton,Texas
Dear Sir1 Opinioa hb. O-909 Rer 'duthorityof a Ccmmissioners' Court to enter into an agrementeither in or out of court'toacaept refundingbonds bearing8.lower rate of interestin lieu of bonds held in the permanentschool fund of the county;and toaccepta dis- count of past due interestaocruedthere- on.
flehave your letter~ofMay 30, 1939, requestingour opinionin answer to t'3 followingquestions8
1. Can the Commissioners' Court legallyenter into an agwrmenteitherin or.out of the FederalDistrict Court to acceptrefundingbonds bearing 3% interest in lieu of bonds now held?
2. Can the Cormnissioners'Court legallyenter into any agreementeitherin or out of the FederalDistrict Court to accept 606 on the dollarfor all past due coupons,includingthe ooupons'dueJanuary1, 1939, and July 1, 1939) A: 4 f I
Hon. E. A. Watson,Page 2 (O-908)
The faots underlyingyour quelstionssre briefly as follonsr The permanentschoolfund of Crosby County owns #15,000.00City of Book- er, Texas, Bonda,~which were acquiredas an investmentfor such fund pur- suantto Section6, ArticleVII, of the Constitution, and Article 2824 of the RevisedCivil Statutesof19261 that the bonds bear interestat the rate of 5-l/2 per cent per annlpp: that the interestdue on said bonds is from four to six years' delinquent,and that $2,OCC.O0of the principal is likewisein default. Further,that suit thereonhas been filed in Federal Courtat Amarilloin an effortto collsctsuch past due secti- ties. This action has been taken in behalfof Crosby Countyand other creditorsof the City of Bookerwho also hold maturedand unpaid items of indebtedness.Further,the valuationsof the City of Bookerhave been decreasedby more than 5% sincethe indebtedness vms created. Bow, by way of adjustment,the City of Booker is proposingto issue refunding bonds bearingintsisstet the rata of S$',and to liquidatethe past due interestat fifty centson the dollar.
The laws of Texas pertainingto the inveshnentof permanent schoolfunds imposea trust upon the countiesto safeguardthese funds, snd only permitthe use of the earningsthersframfor the operationof the sohools;they likeqiessprescribethe type of investmentsthat can be made with said funds.
With respectto lands grantedthe various countiesfor aduca- tional purposes,Section7, Article VI, of the Constitution, provides,in part, that:
"Said lands and the proceedsthsrcof,when sold, shall.beheld by said countiesalone &strust for the benefitof the publio schoolstherein3said proceeds to bs investedin bonds of the kited States,State of Texas,or countiesin said State, or in such other se- curitiesand under such restrictionsas may be prescrib- ed by law; and the county shall be responsiblefor all investmentssthe interestthereonand other revenue, except the principal,shall be availablefunds."
Article2824 of the RevisedCivil Statutesof Taxas re-enacts the above law, and authorizesthe investmentof such proaeedsin other bonds not theretoforeauthorized. T,headditionalauthorization under th$s Article includedbonds of cities,towns and villagesof this State.
Section55, Article III, of the Constitution,statesr
"The Legislatureshall