Court Opinion

ID: 4134212
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:47:32.213956+00
Date Added: 2024-06-11T09:36:30.473466
License: Public Domain

Honorable J. W. Edgar                 Opinion No. M-455
Commissioner of Education
201 East 11th Street                  Re: Whether certain securities
Austin, Texas 78711                       are acceptable securities
                                          for school depositories
                                          under'Article 2832 or
                                          Article 2832c, Vernon's
                                          Civil Statutes, and re-
                                          lated question.
Dear Mr. Edgar:

     By recent letter you have asked this office for an opinion
on the following questions:

          1. Whether the following securities are ac-
     ceptable as securities for school funds deposited
     pursuant to the provisions of Article 2832 or Article
     2832c, Vernon's Civil Statutes.

          A. Federal Intermediate Credit Bank Debentures
          B. Federal Home Loan Bank Notes
          C. Federal National Mortgage Association Notes
                and Debentures
          D. Federal Land Bank Bonds
          E. Banks for Cooperatives' Debentures
          F. Export-Import Bank of the United States
               Participation Certificates
          G. Export-Import Bank of the United States Debentures

          2. Whether Article 842a, Vernon's Civil Statutes, or
     any other statute, operates to make the above listed
     securities acceptable securities for school depositiory
     purposes.

                            - 2255-
Honorable J. W. Edgar, page 2       (M-455)

     Article 2832, Vernon's Civil Statutes, is quoted, in part,
as follows:

          "In any independent district of more than one
    hundred and fifty (150) scholastics, . .. the treasurer
    of the school fund shall be that person or corporation
    who offers satisfactory bond and the best bid of interest
    on the average daily balances or time  deposits for the
    privilege of acting as such treasurer. . .. provided,
    further that such governing body may, in lieu of the bond
    herein authorized, accept a deposit of approved securities,
    which securities may include bonds of the United States,
    or of this State, or of any county, city, town or inde-
    pendent school district in the State, or Anticipation Tax
    Warrants and/or Anticipation Tax Notes legally issued
    by the governing body of such school district, which shall
    be deposited as such governing body may direct, in an
    amount sufficient to adequately protect the funds of such
    school district in the hands of the selected treasurer."

     Subsection d of Section 3 of Article 2832~ is quoted as
follows:

          "d. Approved Securities: shall mean bonds of the
     United States, bonds of the State of Texas, bonds of
     the counties of the State of Texas, bonds of school
     districts of the State of Texas, bonds of any town or
     city of the State of Texas, and bonds of any other dis-
     trict or political subdivision of the State of Texas."

     Article 2832, originally enacted in 1925, is authority for
independent school districts, of over 150 scholastics, to
select a depository for school funds. Article 2832c, enacted
by the Legislature in 1967, represents an alternative method for
independent school districts of over 150 scholastics to select
a depository for school funds.

     Both articles refer to specific securities as being approved
for the purpose of securing the deposits. However, one dif-
ference in the two statutes should be noted in passing. Article
2832~ states that the approved securities shall mean bonds of the

                        -   2256-
Honorable J. W. Edgar, page 3       (M-455)

United States, etc., and Article 2832 states that the approved as
securities may include bonds of the United States, etc. Arguably,
Article 2832 is broader in scope regarding what may be approved
securities.   However, it is our opinion that the Legislature
intended to limit  the approved securities in Article 2832 to
those approved in said statute or some other security authorized
by specific legislation, because there are no guidelines in
Article 2832 as to what would be approved securities, other than
those listed.

     It is further our opinion that question number one must be
answered in the negative, unless the above listed securities can
be considered "bonds of the United States". We think not. Ac-
cording to the Handbook of Securities of the United States
Government and Federal Aqencies, published by the First Boston
Corporation, 22nd Edition, 1966, pages 89-113, the securities
listed above are not bonds of the United States Government,
but rather are obligations of the various Government chartered
agencies. You are referred to the discussion of the various
securities in said Handbook.

     Your second question requires an analysis of Article 842a,
Vernon's Civil Statutes. We quote from Article 842a as follows:

          "Hereafter, all mortgages, bonds, debentures
     notes, collateral trust certificates, and other such evi-
     dences of indebtedness, issued or that hereafter may be
     issued under the terms and provisions of the National '
     Housing Act, approved by the President of the United
     States on June 27, 1934, as amended and as may here-
     after be amended, and all 'insured accounts' issued
     or that may hereafter be issued by any institution
     insured under the provisions of Title IV of the National
     Housing Act, approved June 27, 1934, as amended and as
     may hereafter be amended, or any evidences of indebted-
     ness or accounts that may be issued or insured by any lawful
     agency created thereunder, all mortgages, bonds, deben-
     tures, notes, collateral trust certificates, or other such
     evidences of indebtedness, which have been or which may
     hereafter be issued by the Federal Home Loan Bank Board,
     or any Federal Home Loan Bank, or the Home Coiners' Loan
     Corporation, or by the Federal Savings and Loan Insurance
     Corporation, or by the Federal Farm Loan Board, or by any

                        -   2257-
Honorable J. W. Edgar, page 4 (M-455)

     Federal Land Bank, the Federal Intermediate Credit Banks,
     or Banks for Cooperatives, or by any National Mortgage
     Association, or by any entity, corporation or agency, which
     has been or which may be created by or authorized by any
     Act, which has been enacted or which may hereafter be
     enacted by the Congress of the United States, or by any
     amendment thereto,    which has for its purpose the relief
     of, refinancing    of or assistance to owners of mortgaged
     or incumbered homes, farms, and other real estate, and the
     improvement or financing or the making of loans on any real
     property, shall hereafter be lawful investments for all
     fiduciary and trust funds in this State, and may be accepted
     as security for all public deposits where deposits of
     bonds or mortgages are authorized by law to be accepted."

     It seems clear that the Legislature intended to authorize
that securities of certain federal agencies would be valid
investments and security for all public deposits, and would
include deposits made by public schools.

     It is our opinion that Article 842a would be applicable to
deposits made by public schools under the rather broad definition
of approved security in Article 2832. Therefore, all mortgages,
bonds, debentures, etc. of the specific covered federal agencies
would be approved securities for deposit of school funds pur-,
suant to Article 2832.

     Article 2832~ presents a different question because, as
pointed out on page 3 (above) that Article in Subsection d of
Section 3 defines "approved securities" to mean certain specific
securities, and these specific securities do not include any of
the securities listed in your request.

     Article 2832c, as passed by the Legislature in 1967, is a
much later expression of legislative intent than is Article 842a,
which was last amended in 1961. In addition, Article 2832~ is
a specific statute, whereas Article 842a is a general statute:
and it is a well settled rule of judicial construction that a
specific statute evidences legislative intent more clearly and
will control over a general statute in the event of any conflict.
53 Tex. Jur. 2d 160, Statutes, Sec. 110: Townsend v. Terrell,
118 Tex. 463, 16 S.W.2d 1063 (1929).

                        - 2258   -
Honorable J. W. Edgar, page 5 (M-455)

     Therefore, it is our opinion that Article 842a is not
applicable to deposits made pursuant to Article 2832~. Only
those approved securities listed in Article 2832~ will satisfy
deposits made pursuant to that statute.

     All of the above listed securities are specifically covered
by Article 842a. except the Export-Import Bank of the United
States.

     Since the Export-Import Bank securities not being specif-
ically covered, in order to qualify they would have to be covered
by the general language of Article 842a, to wit:

          "Or by an entity, corporation or agency, which
     has been or which may be created by or authorized by
     any Act, which has been enacted or which may hereafter
     be enacted by the Congress of the United States, or by
     any amendment thereto, which has for its purpose the
     relief of, refinancing of or assistance to owners of
     mortqaqed or incumbered homes, farms or other real
     estate and the improvement or financing or the makinq
     of loans on any real property  . ..I’ (Emphasis added.)

     We are unable to say, as a matter of law, that Export-
Import Bank securities are not covered by Article 842a. Each
such security must be separately examined to determine the
nature of its collateral, as real estate collateral, as required,
is not necessarily present in each instance. The Handbook of
Securities of The United States Government and Federal Agencies,
supra, pages 112-113, indicates the Export-Import Bank has
broad investment powers and therefore any security of such bank
which is specifically secured by a loan on real estate would
satisfy Article 842a.

                            SUMMARY

              The provisions of Articles 2832 and 2832~.
         Vernon's Civil Statutes, do not authorize as
         approved securities for purposes of securing

                        -   2259-
Honorable J. W. Edgar, page 6         (M-455)

          school funds the following listed securities:

          A. Federal Intermediate Credit Bank Debentures
          B. Federal Home Loan Bank Notes
          C. Federal National Mortgage Association Notes
               and Debentures
          D. Federal Land Bank Bonds
          E. Banks for Cooperatives' Debentures
          F. Export-Import Bank of the United States
               Participation Certificates
          G. Export-Import Bank of the United States Debentures

               On the other hand, all of the above listed
          securities including F and G, as qualified, would
          be approved securities for the purpose of securing
          school depository funds due to application of
          Article 842a to Article 2832.

               The provisions of Article 842a do not apply to
          deposits made pursuant to Article 2832~.

                                         Yourp/Y ery truly,

                                                  C. MARTIN
                                                  General of Texas
Prepared by James C. McCoy
Assistant Attorney General

APPROVED:
OPINION COMMITTEE

Kerns Taylor, Chairman
George Kelton, Co-Chairman

Joseph H. Sharpley
Charles Rose
Fielding Early
Jack Sparks

W. V. GEPPERT
Staff Legal Assistant

HAWTHORNE PHILLIPS
Executive Assistant
                         - 2260   -