Court Opinion

ID: 4129619
Source: CourtListenerOpinion
Date Created: 2017-02-18 00:54:17.478859+00
Date Added: 2024-06-11T14:31:36.777790
License: Public Domain

OFFICE   OF THE   ArronNEv    GF.NER.u   STATE   OF TEXAS

   JOHN     CORNYN

                                                      June 3, 1999

The Honorable Michael P. Fleming                               Opinion No. JC-0062
Harris County Attorney
1001 Preston, Suite 634                                        Re: Whether interest on a prosecutor’s hot-check
Houston, Texas 77002-1891                                      fund may be severed from the principal and
                                                               accrue to the county’s general fund (RQ-1054)

Dear Mr. Fleming:

         You ask whether the interest earned on a prosecutor’s hot-check fund, established under
article 102.007(f) of the Code of Criminal Procedure, may be severed from the hot-check fund and
added to the county’s general revenue fund. Because section 113.021(c) of the Local Government
Code severs the interest from statutory special funds belonging to the county, we conclude that
interest on a prosecutor’s hot-check fund must be severed and applied to the benefit of the county
as a whole. We thus concur with Attorney General Opinion JM-632 (1987).

         A prosecutor may establish a hot-check fund in accordance with article 102.007 ofthe Code
of Criminal Procedure. Under article 102.007(a), a prosecutor may impose a fee for collecting and
processing a bad check. See also TEX.BUS. & COM. CODE ANN. 5 3.108(a) (Vernon Supp. 1999)
(defining order “payable on demand”); TEX.CODECRIM. PROC.ANN. art. 102.007(c) (Vernon Supp.
1999) (setting maximum fee). The prosecutor must deposit the fees into a special fund, the “hot-
check fund,” in the county treasury:

                 Fees collected under Subsection (c) of this article shall be deposited in the
        county treasury in a special fund to be administered by the county attorney, district
        attorney, or criminal district attorney. Expenditures from this fund shall be at the
        sole discretion of the attorney and may be used only to defray the salaries and
        expenses of the prosecutor’s office, but in no event may the county attorney, district
        attorney, or criminal district attorney supplement his or her own salary from this
        fund.

Id. art. 102.007(f). Article 102.007 does not instruct the county treasurer how to handle interest that
accrues on a hot-check          fund.

       Under the common law, interest follows principal, or, more picturesquely, “‘[IInterest shall
follow the principal, as the shadow the body.“’ Phillips Y. Washington Legal Found., 118 S. Ct.
1925,193O (1998) (quoting Beckjkd v. Tobin, 1 Ves. Sen. 308,310,27 Eng. Rep. 1049, 1051 (Ch.
1749)). Texas courts follow this rule. See Sellers Y. Harris County, 483 S.W.2d 242, 243 (Tex.
The Honorable   Michael P. Fleming    - Page 2      (X-0062)

1972); Lawson Y. Baker, 220 S.W. 260, 272 (Tex. Civ. App.-Austin           1920, writ refd); accord
Phillips, 118 S. Ct. at 1930-3 1. As the Texas Supreme Court has stated, “Interest.  is an increment
that accrues” to the principal fund earning it, and, unless lawfully separated from the principal,
becomes a part of the principal. Sellers, 483 S.W.2d at 243; accord Lawson, 220 S.W. at 272.

         Interest on a fund created by statute, however, may be severed by means of a statute
expressly overruling the common law. The legislature may overrule the common law if it does so
expressly. See Sellers, 483 S.W.2d at 243. With respect to a special fund, legislation overruling the
common law must be of equal dignity to the law creating the fund. Thus, interest earned on a
constitutionally  dedicated public fund may be severed only by constitutional amendment, while
interest earned on a statutorily dedicated public fund may be severed by statutory amendment. See
Lawson, 220 S.W. at 272-73; Tex. Att’y Gen. Op. No. JM-539 (1986) at 3.

         With respect to a fund created by statute and belonging to the county, section 113.021(c) of
the Local Government Code expressly overrules the common-law rule that interest follows the
principal. Under that section, any interest that accrues on a special fund belonging to the county
“is for the benefit of the county in accordance with other law.” TEX. Lot. GOV’T CODE ANN.
§ 113.021(c) (Vernon 1988). While section 113.021(c) does not expressly limit its application to
the interest accruing on funds created by statute, the law must be construed to be so limited. The
legislature may not attempt to sever the interest on a constitutionally created special fund by means
of a statute. See Lawson, 220 S.W. at 272-73; Tex. Att’y Gen. Op. No. JM-539 (1986) at 3.

         Consequently, the interest on a hot-check fund must be severed from the hot-check fund and
accrue to the county’s benefit ifthe hot-check fund is “money belonging to the county” for purposes
of section 113.021(a). See TEX. LOC. GOV’T CODE ANN. 5 113.021(c) (Vernon 1988) (ordering
severance of interest). As we have said in previous opinions, expenditures from the hot-check fund
are solely within the prosecutor’s discretion and wholly outside the county commissioners court’s
budgeting process. See Tex. Att’y Gen. Op. Nos. DM-357 (1995) at 6; MW-439 (1982) at 6; Tex.
Att’y Gen. LO-96-075, at 2; LO-96-074, at 4. But this fact is of little relevance to determining
whether the hot-check fund belongs to the county or belongs to some other entity for the purpose of
ascertaining the disposition of interest on the fund.

          We conclude the hot-check fund is money belonging to the county. The legislative history
of the phrase “money belonging to a county” indicates that it is meant to distinguish public money
benefitting some aspect of county government from money belonging to or meant to benefit another
(noncounty) public entity or a private individual or entity. Cf: Tex. Att’y Gen. Op. No. DM-396
(1996) at 4 (stating that restitution justice of peace receives under Penal Code section 32.41(e)
does not belong to county, but rather to holder of dishonored check). In 1933 the legislature
authorized the county auditor in counties with populations of 190,000 or more to “adopt and
enforce       regulations .     essential to the speedy and proper collection and checking of, and
accounting for, the revenues and other funds and fees belonging to the county or to any person, firm,
or corporation for whom [a county] officer may have made collections, or for whose use or benefit
[the officer] may have received or may hold such funds.” See Act approved Apr. 29,1933,43d Leg.,
The Honorable   Michael P. Fleming      - Page 3       (X-0062)

R.S., ch. 98, sec. 1, art. 1656a, 1933 Tex. Gen. Laws 217, 217-18. Thus, the law distinguished
between money belonging to the county and money belonging to a private entity and did not
contemplate an alternative owner. Additionally, the county treasurer is custodian of all money
belonging to the county. See TEX. Lot. GOV’T CODE ANN. $4 113.001, .003 (Vernon 1988). The
hot-check fund is a special fund in the county treasury. See TEX. CODE GRIM. PROC. ANN. art.
102.007(f) (Vernon Supp. 1999) (designating hot-check fund “special fund” in county treasury).

        In answer to your question, the interest on the hot-check fund accrues not to the hot-check
fund but to the benefit of the county. The county’s general fund is a permissible beneficiary, but we
need not consider here whether it is the sole permissible beneficiary. This conclusion accords with
a prior opinion of this office, Attorney General Opinion JM-632, which determines that interest
earned on a hot-check fund must be severed from the principal and deposited in the county’s general
revenue fund. See Tex. Att’y Gen. Op. No. JM-632 (1987) at 1; see also TEX. CODE GRIM. PROC.
k-IN.art. 102.007 (Vernon Supp. 1999) (Fee for Collecting and Processing Sight Order); Act of
May 24, 1991,72d Leg., R.S., ch. 396,§ 2,199l Tex. Gen. Laws 1508,1509 (renumbering Code
of Criminal Procedure article 102.007(e) as article 102.007(f)); Act of May 17, 1985, 69th Leg.,
R.S., ch. 269, sec. 1, $102.007(e), 1985 Tex. Gen. Laws 1300,1303 (renumberingCodeofCrimina1
Procedure article 53.08(e) as article 102.007(e)).

         Although we reach the same conclusion this office reached in Attorney General Opinion
JM-632, that opinion does not make clear that a statute explicitly authorizes the severance of interest
from the principal of a hot-check fund. The opinion cites, in passing, the statutory predecessor of
Local Government Code section 113.021(c), Texas Revised Civil Statutes article 1709a, but
the opinion does not rely on article 1709a in reaching its conclusion. See Tex. Att’y Gen. Op. No.
JM-632 (1987) at 1, 3. Rather, the opinion reasons that the hot-check fund is a statutory fund, not
a trust fund, and that, consequently, interest on the fund need not follow the principal. See id. at 2-3.
The opinion then states that the legislature has adopted a statute requiring that interest on such
“statutory funds” be credited “to the general revenue funds of the respective counties,” but the
opinion cites article 1709 ofthe Revised Civil Statutes instead of article 1709a. See id. at 3. Article
 1709 at that time required that “all moneys belonging to the county” be turned over to the county
treasurer; required the county treasurer to “keep and account” for all county money in a designated
depository; and required the county treasurer to disburse county money as the county commissioners
court directed. See Act ofMay 21, 1971,62d Leg., R.S., ch. 467, 4 1, 1971 Tex. Gen. Laws 1654
(current version at TEX. Lot. GOV’T CODE ANN. 5s 83.006,113.001,           ,003, .041 (Vernon 1988 &
supp. 1999)).

         In our opinion, the critical issue in determining whether interest may be severed from the
principal ofa fund created by statuteunder section 113.021 ofthe Local Government Code depends
not upon whether the fund is held in trust, but whether the fund belongs to the county. While the
indicia of a trust, listed in Attorney General Opinion JM-632, may be helpful in determining whether
the fund belongs to the county, they may not resolve the issue. See Tex. Att’y Gen. Op. No. JM-632
(1987) at 2 (listing, as indicia of a trust fund, (1) that funds are administered by trustee; (2) that funds
are not granted to county in its sovereign capacity nor collected for county’s general operation; and
The Honorable   Michael P. Fleming     - Page 4       (X-0062)

(3) that funds are to be spent and invested for specific, limited purposes and to benefit specific group
of individuals). The legislature may decide to sever the interest from the corpus of even a statutory
“trust,” or special fund, held for a public entity, if it does so expressly. See Lawson, 220 S.W. at
272-73. To the extent the reasoning of Attorney General Opinion JM-632 is inconsistent with this
opinion, it is modified.

                                         SUMMARY

                         In accordance    with Local Government          Code section
                113.021(c), interest that accrues on the principal of a prosecutor’s
                hot-check fund, a statutory fund established under article 102.007(f)
                of the Code of Criminal Procedure, must be severed from the
                principal. The interest accrues instead “for the benefit of the county.”
                Attorney General Opinion JM-632 (1987) is modified to the extent its
                reasoning is inconsistent with this opinion.

                                                JOHIN    CORaYN
                                                Attorney General of Texas

ANDY TAYLOR
First Assistant Attorney General

CLARK KENT ERVIN
Deputy Attorney General - General Counsel

ELIZABETH ROBINSON
Chair, Opinion Committee

Prepared by Kymberly K. Oltrogge
Assistant Attorney General