Court Opinion

ID: 4137592
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:26:40.023747+00
Date Added: 2024-06-11T14:36:43.223585
License: Public Domain

Hon. J. C. McEvoy                      Opinion No. V-1182
County Attorney
Waller County                          Re:   Legality  of investing
Hempetead, Texas                             county slnklng fmde,
                                             operating fun&s, and
                                             bonds    fund8    ln       Unlted
Dear Sir:                                    States    eeaurltles.
            You have requeeted an opinion relative   to the
authority   of the caml80loners~   aourt to Invest oouutr
 funds, proceeds  iran the sale of county bonds,   and alnk-
'lng funds In certain  United States Government securities.
             In every instance that the comml8aloners~ court
 has been authorized to invest public money in v=&oua
 securltlea,   the Leglalature has named bonds of the United
 State0 Qoverment lloong the eecuritleu   in which such,
~11~ funds may be Invested.    Att'y Qen. Op. o-4297 (l&t:
           Artlole 708b, V.C.S. (Sea. 2 OS S.B. 19,                 Acts
48th Leg., X3.8. 1943, ah. 131, p.211), provides:
            "That any political    sybdlvlr$oa    of the
     State of Texas which heretofore        haa ,Losued
     and sold bonds and 1s unable to obtain labor
     and materials    to carry out the purpose ior
     whloh the bonds were issued may invest Ythe
     proceeds of such bonda now on hapd In de-
     fense bonds or other obligations        of the
     United States, of ~rlca;.,pTovided,~.Isow-~      ,: ~,.    "~
     ever, that whenever ~uar time or snp other
     regulations    shall permit such pOlltloa1
     eubdlvlalons    to acquire the necessary labor
     and materials,    the obligations    of the United             .
     Ststes in orhich said proceeds are invested
     shall be sold or redeemed and the prooeeds
     of said obligations     shall be ueed ior the
     purpose for which the bonds of any such
     polltlcal   subdlvlrrlon were authorized."
          Article 12695-3, V.C.S. (LB. 746, Acts               48th
Leg.9 R.S. 1943, ch. 321, p. 4811, prov$dee:
Hon. J. C. McEvoy, page 2 (v-1182)

            “All political   subdivisions    of the State
     of Texas which have balances remaining ln
     their accounts at the end of any fiscal        year
     may Invest such balance8 In Defense Bonds or
     other obligations     of the United States of
     America; provided,     however, that when such
     funds are needed the obligations        of the
     United States in which such balances are
     Invested shall be sold or redeemed and the
     proceeds of said obligations       shall be de-
     posited In the accounts from which they were
     originally   drawn.”
           Slnce.you state In your request that none of
the proceeds contemplated being Invested are fram,bonds
sold ‘prior to the enactment of Article  70&b, we agree
with you that its provisions  have no a plloatlon  to your
question.   Att’y Qen. Op. O-7393 (19433.
            It is noted that Articles   708b and 126ggzl;;;
enacted at the same Seselon of the Legislature.
708b provides for the investment of bond money and Artl-
cle 12693-3 provides for the investment of the balances
remaining in the various accounts of political      subdlvl-
slona of the State.     Therefore,  It Is our opinion that
the provisions   of Article   12693-3 are not appllaable   to
the Investment of bond fund8 since that is speclflcally
provided in Article    708b.
           In construing the provlalone of Article          12693-3,
It was held In Att’y Qen. Op. O-5278 (1943):
           “The foregoing   Act authorizes ‘all poll-
     tlcal aubdlvlelons    of the State (which ln-
     eludes counties)    that have balance8 remaining
     in their accounts at the end of.sny fl8Cal
     year to invest auoh balances ~ln defense bond8
     or other obligations    of the United State8 of
     America.    However, when euch~ funds are needed
     the obligations    of the Unlted State8 in whiah
     such balances are invested ahall be aold or
     redeemed and the, proceed8 of eald obligation8
     shall be deposited    in the account8 Wzun which
     they were orlginally~drawn.
           “In view of the foregoing  Act It Is our
     opinion that counties  having balances remaln-
     lng ln their-acc.ounts  at the end,of any fl8Cal
Hon. J. C.. XcEvoy, page 3 (V-1182)

     year may invest SUCh balances ,in defense bonds
     or others obllgatlom~ of the United States of
     Amerlca~. "
           Article   779, ~V.C.S.,    provides:
            "The Commlaalonera Courts may invest Sink-
     lng funds accumulated for the redemption aad
     paymnt of any bonds issued by such county,
     political    subdivision,     road~dlstrict,      or de-
     fined district     thereof,    In bonds of the United
     States,   of Texas, ,or any county in this State,
     or any.sohool~*dletrict       or road dlstrlat      of this
     State, or-my Incorporated          city or town of this
     State; or In bonds of the Federal Farm Lo&n
     Bank system, or in war-savings          certlflaates,
     and certificates      of.indebtednees      iSSUed by the
     Secretary of the Treasury of the United States.
     Ho such bonds shall be purchases which, acoord-
     lng to their terms, mature at a date subsequent
     to the tire of maturity of the bonds for the
     payment of which such sinking fuad was crehted.'
           Article   836, V.C.S.,     provides:
            "The legally    authorized governlng body of
     any county, city or town, or the trustees         of
     any 8ChOOl di8triOt       or SchOOl COmUUnlty, IW3y
     inpeSt their re8peOtlVe       Sinking funds iOr the
     redemption and payment of the outetandlng bonds
     of such county, olty or town, or camunlty,            In
     bond8 of the United States; war-savings         oerti-
     flc&tes;.and    certlilcates     of Indebtedness lu-
     sued by the Secretary of the Treasury of the
     United States;     In bonds of Texae, or any muu-
     ty of this State, or of any Incorporated         olty
     or towa;~ aad la shares or share aooouata a?
     building and loan associations        orgaaleed un-
     der the laws of thlr State, 0~ Federal Saving8
     and Loan A88oOiatiOll8 donlolled       in this State.
     where auoh shares or share acoounts are IS-
     sued uader aad by virtue of the Federal SaV-
     lngs and Loan Insuranoe Corporation.          lo suoh
     bond8 shall be purohaeed which, aocordlng         to
     their terms, mature at a date subsequent to
     the time of maturity of the bonds for the paJI-
     meat of whloh suoh sinking fund was oreated.
  -      .

Hon. J. C. MccEvoy, page 4       (V-1182)

            In view of the above articles, it was held In
Att'y  Qen. Ops. O-3329 (1941), O-4413 (1942), and O-4621
(1942) that aurplue accumulations In the sinking fund of
a bond Issue may be Invested In United States bonds, but
the principal   raised from the sale of bonds can only be
us&d for the purpose for which bonds were voted and aM-
not be Invested In securltlee.
           Therefore,   you are advised that the proceeds
raised from the sale of bonds issued subsequent to the
effective  date of Article   708b which oonatltute  the bond
principal  cannot be Invested In United State8 SeCuritieS,
but the surplus accumulated In the sinking fund may be
Invested In bonds OZ the United States.      You are further
advised that the county may invest balances remaining in
the various county funds at the end of any flSCa1 year
in defense bonds or other obligatlone     of the United States
Qovernment . However, when such funds are needed, the ob-
ligations  of the United States in which such balazlues are
invested must be sold or redeemed aad the proceeds of
said obligations   deposited  In the aooounte SPOn whloh
they were orlglnally'drawn.

               The proceed8 f&m the sale of bonds
        Issued subsequent to the effective      .date of
        Article   708b, V.C.S.,  (April 12,! 1943) which
        constitute   the-bond prlnalpal   caljnot be in-
        vested in United States eecurltiea.        Surpluses
        accumulated in the elnklng fund, however,-may
        be invested ln bonds of the United States.
        Balances remaining in the varloua'county        fIUld8
        at the end of any flac&l year may be InVeSted
        In bonds of the United States Qovernnient. When
        these funds are needed, the obligation        of the
        United States in which the balances are in-
        vested must be SOId or redeemed and the pro-
        ceeds of the obligations    deposited    ln the ao-
        counts from which they were Originally       drfWn.
        Arts. 708b, 779, 836, and 12693-3 V.C.9..
        Att'y Qea. Opa. O-3329 (lgbl),     0-h      (l&),
Hoxi. J. C. McEvoy, page 5 (v-1182)

                        , 04621   (lg42),   o-5278 (lg43),

APPROVRD:                                          YOUl’S    very truly,
J. C.   I)aViS,   Jr.                                 PRICE DANIEL
County Affalrs     Dlvlsloa                        Attorney    Qeneral

Qeorge W. Sparks
Bond Dlvialon
JeSSSP. LIltOn,  Jr.
ReviewwingAssl8tant

Charles D. M&hews
First As#;iStStit
JR:w