Court Opinion

ID: 4145708
Source: CourtListenerOpinion
Date Created: 2017-02-18 03:59:53.62854+00
Date Added: 2024-06-11T14:23:11.883830
License: Public Domain

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                   TEE     ATTORNEY             GENERAL
                                OF    TEXAS

Gerald C. Mann

       Hon. Gaynor Kendall             Opinion No. O-705
       State Board of Education        Aer Collectability    of 6% Interest
       Austin, Texas                   on delinquent interest   coupons of
                                       municipal bonds belonging to the
       Dear Sir:                       Permanent Free School Fund.
                  Under date of April 26, 1939, you submit for         the opin-
       ion of this department the following  question;
              “The City of Brownsville   Texas, is in default on
              interest coupons attache h to bonds belonging to the
              Permanent Free School Fund. The City Manager chal-
              lenges the authority of the State to collect   6% in-
              terest on delinquent interest  coupons due the school
              fund.
              “4 previous Attorney General advised that defaulted
              coupons owing to the State School Fund bear 6% in-
              terest on delinquent interest   has been charged and
              collected  by the State Treasurer on delinquent inter-
              est on municipal bonds,   Mr. Runyon, City Manager of
              the City of Brownsville,  has asked that we inquire as
              to your opinion in the matter.    Will you please ad-
              vise whether 6% interest  on delinquent interest  should
              be charged and collected  on behalf of the school fund?”
                    A particular  description     of the municipal bonds in ques-
       tion as to maturities,     interest    rates,  etc.,   is not embodied in
       your letter,    nor do we deem such information        necessary.    Your in-
       quiry does not involve the collectability           of interest   upon the
       principal    amount of the bonds upon maturity, but rather the col-
       lectability    of interest  upon interest     coupons after maturity there-
       of.
                   In answering this question, we shall assume as correct,
       information which we have obtained independent of your letter,      to
       the effect that the interest   coupons in question contain no provi-
       sions within themselves for the payment of interest ‘at a fixed
       rate after the maturity of such coupons.    This is the determina-
       tive fact rather than the rate of interest   which the principal    ob-
       ligation   bears.
                   Under date of February 9, 1931, Honorable Moore Lynn,
       then State Auditor,    submitted for the opinion of this Department
       the following   questiont
                                                                  .   ..

Hon. Gaynor Kendall,      page 2   (O-705)

               “The permanent school funds of the State are
         holding a large amount of bonds of ‘cities,  counties,
         and districts,   In some  cases the interest is not
         paid when due and in other cases the principal   re-
         mains unpaid after the due date.
               “(1)   When an interest  coupon is not paid on the
         due date, after demand is made, and the coupon con-
         tains no stipulation    as to interest  after maturity
         thereof,   has the Treasurer a right to demand, and is
         it his duty to demand, that the city,      county or dis-
         trict pay interest    on the past due payment after its
         maturity    and if so, at what rate should the interest
         be comput.ed?”
              In a well-considered opinion  amply supported by author-
ities,     Assistant Attorney General Soot4 Gaines ruled as follows:
               “Answering your inquiry No. 1, it is the opinion
         of the writer that the State Treasurer not only has
         the right to demand, but it is his duty to require,
         and demand interest  to be paid on past due interest
         coupons on all municipal securities    held and owned by
         the permanent fund, after presentation,     demand and re-
         fusal has been made by any city,    county or district
         from whom said indebtedness is due, said interest       to
         be computed at the legal rate of six per centum per
         annum from the date of maturity of said interest       in-
         stallment for which said coupon was given.       This
         would be the case in the event provision      is not made
         in the coupon for payment of interest     thereon after
         maturity thereofen

           To the same effect   is an opinion by Assistant Attorney
General Whitehurst to Gregory Hatcher      of date February 7, 1930,
and an opinion by Assistant Attorney Eeneral Victor Bouldin di-
rected to Judge Simpson, State Auditor, some time during 1935.
The records of this office    do not reveal any oplnion holding to
the contrary.
           An independent research by this Department upon receipt
of your inquiry convinces us that the three opinions adverted to
announce the correct rule of law upon this subject,    and in view
of the full and able discussion .of the statutes  and authorities
therein,  we do not deem it either advisable  or necessary to fur-
ther elaborate thereon in this opinion.    It appearing that you
Hon. Gay-nor Kendall,   page 3   (O-705)

have copies of these opinions in your files,        it will     suffice
to refer you thereto for guidance.
                                     Yours very truly
                                     ATTOBNEYGENWAL
                                                  OFTEXAS
                                     By /s/   Pat M. Neff,      Jr.
                                     Pat M, Neff,    Jr.,     Assistant
APPROVED:
/s/ Gerald C. Mann
ATTORNEYGENERAL  OF TEX4S
APPROVED:W&NI~~4"
BY         I
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