Court Opinion

ID: 4138132
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:32:53.533382+00
Date Added: 2024-06-11T14:36:31.892429
License: Public Domain

July   26,   1948

Mr. Joe Skiles,  Business  Manager
North Texas State Teachers   College
Denton, Texas
                 Opinion No. v-640

                     Re:    The legality      of selecting   a bank
                            as trustee     for bondholders     of a
                            college    revenue bond issue when
                            an officer     of the bank is also a
                            member of the college’s        board of
                            resents.
Dear Sir:

              Two letters,       one from you and one from Mr.
William L. Kerr, President            of the Board of Regents,
State Teachers       Colleges     of Texas, both request        an
opinion   of this Department upon the ^abmove      .     subject
matter.     We have before        us a copy 0s tne proposea
contract     evidencing     an agreement by and between the
Board of Regents of the State Teachers               Colleges    of
Texas for and on behalf           of the North Texas State
Teachers    College     at Denton and Dallas National           Bank,
Dallas,   Texas.      The instrument      evidences     a contract
which,   in legal     effect,     makes the bank an agent or
trustee    for the benefit        of bondholders     of certain
revenue bond issue and likewise             for the benefit      of
the Board in divers         respects,    wherein the Board
agrees to make and maintain certain              deposits    with
the bank and agrees to pay for the bank’s services
a stipulated      monthly sum. The integrity            and hon-
esty of the regent-officer            is questioned     by no one.
You are interested         solely   in the legal     principle     in-
valved.

           This     brief general        statement of the nature
of the contract      is sufficient        for the purposes of our
opinion.
           It is contrary      to the public   policy  of the
State for public   officers      or boards of the State to
make contracts   of the type above mentioned.         This is
so because such public      officers    and boards owe to the
or.   Joe   Skiles   - Page 2    (v-640)

State their      unbiased official       discretion      in the matter
of making contracts          with others,     and especially      free
from personal       interest     adverse to the State.          The con-
tract   of the Board of Regents,           of which Mr. Thomas is
a member, with the bank, of which Mr. Thomas is Vice-
President,      Is in violation       of the public      policy   above
mentioned.       City of Edinburg v. Ellis           (Corn. App.) 59 S.W.
(2d) 99.      It is not a question         of whether qr not the
public    interest     will actually      suffer   in permitting       the
particular      contract,     but it is rather one of a sound
policy    as to official        conduct where the law will not
speculate     upon the actualities         following     its violation.
Many years ago the Supreme Court reversed                  the judgment
of a district       judge in a case where he was distantly
related    to one of the parties,          and sent the cause back
for another trial,         saying,    in its judgment of reversal,
that in truth the judge below had decided                  the case
properly.

               A contract   between the Board of Regents
        of the State Teachers      Colleges   with a National
        bank whereby the bank is to act as agent and
        trustee   for certain    bond proceeds    and the
        Board pays to the bank certain        monthly pay-
        ments and keeps and maintains        certain  deposits,
        is contrary    to public   policy   and should not be
        made.

                                                Yours   very   truly,

                                           ATTORNEYGENERALOF TEXAS

OS:wb                                           Assistant

                                           APPROVED
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