Court Opinion

ID: 4133426
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:37:58.027306+00
Date Added: 2024-06-11T14:36:28.284044
License: Public Domain

THF,        ATTORNEY                 GENERAL
                                 OF      TEXAS

Honorable   Robert   E. Johnson                    Opinion      No.     M-1243
Executive   Director
Texas Legislative      Council                     Re:      Upon return      to the Ford
P. 0. Box 12128,     Capitol   Station                      Foundation    of the unex-
Austin,   Texas    78711                                    pended   balance    of a grant
                                                            should   the interest      earned
                                                            on the deposits       be returned
                                                            with the principal       or re-
                                                            tained   by the grantee,       the
Dear     Mr.   Johnson:                                     Texas Legislative       Council?

                 In your recent        opinion   request,     you     provided   us   with
the     following    information:

                 “In 1964 the Legislative        Council    received
         a grant    of $88,000   from the Ford Foundation            for
         partial     support  of a legislative       intern    program.
         The program      is now terminated      and the Ford Founda-
         tion    has asked for a refund        of the unexpended
         balance    of the grant.

                “The balance   in the internship         account   at
         this   time is $10,183.21,       consisting     of $7,621.02
         remainder     of the original      grant    and $2,562.29
         earned    interest  on deposits.

                “It    is our intent     to refund      the grant    balance
         to the foundation.           Our question      is, should    the
         full   amount of $10,183.21         be forwarded      to the
         Ford Foundation        or should    the interest      earned    on
         deposits      be considered     an administrative        earning
         and retained       by the Council?        If so, would it be
         proper     to deposit     the interest      earned  to the General
         Revenue      Fund?”

          According   to Black’s Law Dictionary,                       “grant”    means “to
bestow; to confer;  upon someone other    than the                     person    or entity
which makes the grant.”

                Under     the terms     of the   Ford Foundation’s     grant   to the
Texas     Legislative        Council    “grant   funds will   be returned    to the

                                       -6088-
Hon.   Robert     E.      Johnson,     page   2    (M-1243)

Foundation   if these   funds  are not expended                   or committed       for   the
purposes   of the grant    and within  the period                   stated.”

            We view this        grant    as a gift       which could       have been ex-
pended  in its   entirety       during     the five-year         period    of the grant.
The funds were given         to the Legislative            Council     for the use and
benefit  of the Council          in its    legislative        internship      program
and were deposited       to the Council           in a private        account     in a local
bank.   We do not find         that   this    grant     created     a trust     or that the
Council  acted   as trustees        of these        funds,    but rather      the Council
was the beneficiary        of the grant         and the interest          derived    from
time deposits    became the property              of the beneficiary          and did not,
as in a trust,    accrue       to the principal.

              Return  of the unexpended      grant   funds plus      interest
earned    on the funds   is more than is required         by the terms of the
grant.     Return of the unexpended       funds    and interest     could     be
looked    upon as an “investment”       which is prohibited        in grants
of this    type because    such grants    must be made for “charitable”
purposes    under the Tax Reform Act of 1969.            Therefore      we hold
that only     the unexpended    balance   of the grant      funds,    without    the
interest,     should  be returned    to the Ford Foundation.

                Article       2543d,    Section   1,   Vernon’s     Civil   Statutes,
provides    :

              “Section      1.   Interest     received     on account       of
       time deposits        of moneys in funds         and accounts        in
       the charge      of the State       Treasurer      shall    be allocated
       as follows:        To each constitutional            fund there       shall
       be credited       the pro rata portion          of the interest
       received     due to such fund.            The remainder       of the
       interest     received,     with the exception           of that portion
       required     by other     statutes      to be credited        on a pro
       rata basis      to protested        tax payments,       shall   be
       credited     to the General         Revenue   Fund.       The interest
       received     shall     be allocated       on a monthly      basis.”

              We are of the opinion         that    the interest       earned   on the
grant   funds    should   be deposited      to the credit         of the General      Revenue
Fund because       the interest    actually      belongs     to the State,      although
the State     Treasurer    was onlv constructivelv              and not directlv
“in charge”      of the account     which earned         the interest,      under’the
holding    in Boyett    v. Calvert,      467 S.W.2d 205,   209 (Tex.Civ.App.
1971,   reh.den.).

                                         -6089-
Hon.   Robert   E.   Johnson,   page    3    (M-1243)

                                    SUMMARY

               The unexpended      balance    of the Ford Founda-
       tion    grant  must be returned        to the Foundation.
       The interest       earned   on the grant     funds must be
       deposited     to the General       Revenue   Fund under
       Article     2543d,    Vernon's   Civil   Statutes.

                                                         eneral     of   Texas

Prepared    by Linda     Neeley
Assistant    Attorney     General

APPROVED:
OPINION COMMITTEE

Kerns Taylor,    Chairman
W. E. Allen,    Co-Chairman
James Maxwell
Jim Swearingen
Lewis Jones
Linward  Shivers

SAMUEL D. MCDANIEL
Staff Legal Assistant

ALFRED WALKER
Executive Assistant

                                    -6090-