Court Opinion

ID: 4132872
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:31:23.96483+00
Date Added: 2024-06-11T14:33:55.993619
License: Public Domain

January    24,   1975

The Honorable Marvin F.     Marshall                 Opinion No. H-      506
County Attorney
Hale County                                          Re:    Implications  of a county’s
Plainview.  Texas 79072                                     taking vendor’s lien notes
                                                            for the sale of county
Dear Mr.   Marshall:                                        echo01 lande.

   You have requested    our opinion   on the following     questions:

       1. Is a commissioners’   court authorized  to
       accept a vendor’s lien note as partial payment
       for county school lands?

       2. If so, is the commissioners’   court
       authorized to sell such notes and place the
       proceeds therefrom   in the permanent   school
       fund of the county?

        3. Is there a particular procedure       which the
        commissioners’   court must follow       in selling
        such notes.

        4.  May the commissioners’    court distribute the
        proceeds therefrom   to the school districts  of the
        county, and if so, for what purposes?

     Article 7, section 6 of the Texas Constitution    authorizes   a county to
“sell or dispose of its lands in whole or in part, in manner to be provided
by the Commiseioners’      Court of the county.”    This power of the commis-
sioners’ court has been described      as “comprehensive”     and “carry[ing]
with it the right to do all things incidental to its proper exercise.”     Delta
County v. Blackburnt     93 S. W. 419, 420 (Tex.Sup.    1906).    The Supreme
Court long ago recognized      the authority of the commissioners’     court to
accept a vendor’s lien note for the sale of county school lands.        “Whether

                                  p.   2281
The Honorable   Marvin    F. Marshall,    page 2   (H-506)

a sale shall be made    for cash or on credit,   and by executed conveyance
or executed contract.    are questions  evidently committed to the commis-
sioners’ court. ” &,      at 420.  We therefore answer your first question
in the affirmative.

    With regard to your second and third questions,  we have discovered
no instance in which these specific inquiries have been addressed.   In
Delta County, the issue was whether the commissioners’    court might
lawfully reduce the interest rate on the purchaser’s      note to the county.
The Court refused to sanction the discount,      declaring that the county,
under the terms of article 7, section 6, of the Texas Constitution.       is a
trustee for the benefit of the state’s, public schools,   and hence precluded
from giving away its funds.     3,    at 420-21.  See Comanche County v.
Burks, 166 S. W. 470 (Tex. Civ. App. --Fort      Worth 1914, writ ref’d. ); and
Countv School Trustees    of Brazoria    County v. Brazoria    County, 240 S. W.
675 (Tex. Civ. App. --Galveston    1922, no writ).

     The thrust of Delta County seems to be that the commissioners’
court may enter into new arrangements      for the sale of its school lands,
so long as the value of its original contract is not diminished.     In
Waggoner v. Wise County, 43 S. W. 836 (Tex. Civ. App. --1897,         writ
ref’d. ), the court held that the commissioners’    court has authority to
release the original vendees from liability on a vendor’s      lien note and
to accept instead the obligation of the parties to whom the vendees have
sold their interest,  provided that the property remains     secured by a deed
of trust.

    We therefore   believe that the county commissioners   of Hale County,
acting in their fiduciary capacity as trustees of the permanent school
fund, may sell its vendor’s lien notes and place the proceeds therefrom
in the permanent   school fund, but that the notes may not be sold at less
than their fair market value at the time of sale.

    There is no procedure prescribed    in either statutory or case law for
the sale of vendor’s lien notes by a commissioners’     court.  We are of
the view that the commissioners’   court, in accordance    with its powers
recognized  in Delta County, is free to adopt any reasonable     procedure,
so long as the notes are not sold at I.ess than their fair market value.

                                     p.   2282
The Honorable    Marvin   F.   Marshall,    page 3   (H-506)

     Your final question inquires whether the commissioners’      court may
distribute the proceeds   from the sale of the notes to the independent
school districts  of the county, and if so, foi what purposes.    Article 7,
section 6b, of the Texas Constitution authorizes    the commissioners’
court to:

        . . . reduce the county permanent school fund.      . .
        and..    . distribute the amount of the reduction
        to the independent and common school districts
        of the county on a per scholastic  basis to be used
        solely for the jnrrpose of reducing bonded indebted-
        ness of those districts   or for making permanent
        tmfiroveinents.

The only caveat is that the commissioners’     court must retain in the fund
an amount sufficient “to pay ad valorem taxes on school lands or royalty
interests owned at the time of the distribution.  ”

     We believe that this provision is clear,   an d that it authorizes   distribution
of the proceeds    from the sale of the vendor’s   lien notes so long as such
distribution   is carried out on a per scholastic   basis,   the distributed   funds
are used by the districts   only to reduce bonded indebtedness        or to make
permanent improvements,       and an amount is retained in the fund sufficient
to cover the county’s obligation for ad valorem taxes on the subject
property.    &    Attorney General Opinion H-47 (1973).

                          SUMMARY

            A commissioners’    court is authorized to accept
        a vendor’s lien note as partial payment for county
        school lands, and is further authorized to sell such

                                       p.   2283
                                                                                .-   _.

The Honorable   Marvin   F.   Marshall,        page 4     (H- 506)

        notes at not less than their fair market value at
        the time of sale.   The proceeds    therefrom   should
        be placed in the permanent   school fund of the county,
        and may then be distributed    to the school districts
        of the county, subject to the restrictions    imposed
        by article 7, section 6b of the Texas Constitution.

                                               Very   truly yours,

                                               Attorney   General    of Texas

APPROVED:

DAVID   M.   KENDALL,     First   Assistant

C. ROBERT HEATH,         Chairman
Opinion Committee

                                          p.   2284