Court Opinion

ID: 4144035
Source: CourtListenerOpinion
Date Created: 2017-02-18 03:40:29.215134+00
Date Added: 2024-06-11T14:31:51.656301
License: Public Domain

Honorable Cullen B. Vance
city A;w-p3y
Edna,

Dear Sir:                      Opinion Number O-2353

                               Rer In the event the coming
                                   election carries and the
                                   proposed bonds are voted,
                                   what will be the status of
                                   the #lOO,OOO bonds previous-
                                   ly voted?

          We are in receipt of your opinion request of recent
date end quote from your letter as followsz

               "In 1938 the City of Edna voted bonds in the
          amount & $100,000.00 for the purpose of ooni
          strutting sn eleotric light and power generating
          and distribution system.
               "Recently it was determined that this amount
          would-be inadequate to build the system, where-
          upon, an election was called for May 17th for the
          purpose of voting on bonds in the amount of @50,-
          000.00, the purpose of these bonds being Identical
          with that originally voted.
               mFhe question is, in the event the coming eleo-
          tion carries and the bonds are voted, what will be
          the status of the $lOO,OOO.OO' bonds previously
          voted?
               llWith respect to the bonds first voted, nothing
          further has been done since they were voted."

          If the City of Edna votes.another bond issue of
9150,000.00, they will have outstanding a total authorized
bond issue of #250,000.00, as there is no law permitting the
cancellation or revocation of an authorization once
obtained from the electorate.
Honorable Cullen B. Vance, page #2, O-2353

          We are enclosing a copy of our Opinion Number
o-1339, which we believe clearly sets forth our view on
this point. It us our understanding that both issues
are revenue bonds issued under Artiole 1118, Vernon's
Annotated Civil Statutes, thereby pledging the net
revenues from said system, and further secured by a
mortgage on the properties of said system. Article 1113,
Vernon's Annotated Civil Statutes, provides, in part, as
follows:
          "No part of the income of any such system
     shall~ever be used to pay any other debt, ex-
     pense or obligation of such city or town, until
     the indebtedness so secured shall have been
     finally paid."
          The Supreme Court   of Texas has construed this
language to preclude cities   from issuing second-mortgage
bonds against the income of   a light system until final
payment of the indebtedness   secured by the original bond
issue. City of Houston vs.    Allred, 71 S.W. (2d) 251.
          Therefore, we see that the @OO,OOO.OO  issue
previously voted would, as a matter of fact, lie dorment
and definitely could not be issued until the $150,000.00
debt had been fully paid. If at some future time, after
the $150,000.00 debt has been fully discharged, the
properly constituted officials of the city attempted to
issue the $100,000.00 of bonds, they could not do so if
it is conclusively shown that the purpose for which such
bonds had been authorized had been accomplished.

          Trusting that the foregoing answers your
question, we are
                                    Very truly yours

APPROVED JUNE 15, 1940         ATTORNEY GENERAL OF TEXAS

s/ Gerald C. Mann              s/ Claud 0. Boothman

ATTORNEY GENERAL OF TEXAS      By
                                        Claud 0. Boothman
                                                Assistant
Approved Opinion Committee
By BWB, Chairman

COB-s/cg
Encl.