Case Information
*1 Bon. George A. Hlght Opinion NO. O-3623
Chief Accountant Re: Liability of the Board on bonds board of County and Dis- previously made eligible for partici- trict Boaa Indebtedness Aust&n, Texas ation in the county and district
R ghway fund when such bonds have de- faulted as to principal and interest.
Dear Sir:
tie have your letter setting forth certain facts a&m- questing our opinion on the question stated. The facts are: ?A county proposes t.c refund an eligible issue ,,,_ ~,, ~~ .ef ,b&ds -vB.$&, ‘,,are. u ,.defan& ., .T& ~:aty &+ ._I ., ~.. ..,:; % :: :_ ..’ @m&aseiC:btids’ of thlS’ ,1&3ue, at Xess than their par ~.~ ,‘::~ dLlie’~ aiid have ‘. requeatsd the ‘Board to cr&ait the coqty tiththa amount:the Board:set aslde~ to ‘r&Ire ; .: the .bonds .at their maturity date.’ The-: amouut set : : . . . - ._. aside being’ the ‘peri?e&age of. each bond ‘of Ws is- .. : sue* .&a deter@ned bye the Board, which was
.expended ~Xri: the construction .of a~ State des gsy: : highway or hl&iiays &xi said county.
“It is also proposed to escrow al3 interest cou- pans of Ws issue which are in &fault and pay #mm as funds are Wailable ,011 the basis of fifty cents on the dollar.”
Your request 1st
“Please advlse this Board if the payments due by the State on the defaulted principal and Interest of this issue be made on the basfs of the actual cost to the county or on ~the basis of the par value of the maturities in dafault.”
Subsection (a) oft' Section 6 of House BllX’~688 pas@ by Forty-sixth Legislature, Ngular Session, 1939, reads in part . -- as rouowm “All bonds, warrants or evidences of in- debtedness heretofore issued by counties or de- fined road districts of this &ate which mature on or after January
, . . ‘- -. -.I
Hon. George A. Hight, page 2
date and prior to January 2,, 1939 have been
designated a part of the system o$ State high- ways :. ,. . whether said Indebtedness is now
evldeuced’by the obligation originally issued
or lay refunding obligation or both, shall be
eligible to participate 1 n the distribution of the moneys coming into said County and District flthway F’nnd, subject to the provisions ob this
shall participate in said County and &a: Ik%ict highway Fuud as of the date of the designktion of said road as a part of the State syste& . . l n (Underscoring ours)
Subsection c of Section 6 provides in part: “It shall be the duty of the Board of County and District Road Indebtedness . . . to ascer- tain and determine the amount of indebtedness eligible under the provisions oft this. Saction cf this ‘Act .to partic%pate~ 3.n the mans 8 coc+¶ng. : i_ . . . . _.. : . . . .&.
‘*. into.’ said::Corinty-‘end ~Road.bisti’ict R3.g ajr .Md
. ~, . . And said’:&ligation~to said”amount and
extent shall be eUg%b%e for ‘paitlcipatlon ln
the moneys~ coming Into .the County and .Road R&s- .’ .xtric.t; Rlghtiay Fund and said ascertainment, and : Y .. ,. .:.: dstermination shall be certified to the, county
. ’ judge by said Board ,and. all -of the matured out- . 1. stand%@ obligatl’ons of’ said issue shall .rata-:
. .
bly have the benefit of said participation iu
sziW moneys? Q m The.- ascertainment and deter- &nation by.the ,Board,.after reasonable notgce and ‘hearing of the amount of y. couuty or a*
f fned~~‘mad .~&Lstr%ct~: .obligatioii e IgSble under
the proti&ons of, this Act . . ,,. .&all be fSnal and conoluSive and &q&l ,not be subject to re-
view in auy others tribunal2’ ’ .‘.
Referring baok to Section 1 tie find this ~langua& ‘tAnc7 it is hereby deterWed that the further provisioneof this Actconstitute fair, just end ~equltable oomp&nsatlon, repayment and reimburse- ment’ to said c&ties’ ~amd def lned distr$cts for their ‘aid and’ assista@ to’ the-state in the cm- struction ‘of the. State highways. ., . And my
discharges the~%egally ~implhed obligations of State ‘to compensate, repay and reimburse agencies of the estate for expenses incured at the instance and solicitation of the State as well as for ex- penses incurred for the benefit of the State. . . ”
me sections of House Bill 688 first above quoted Con- template full payment of that pert of the expenditure Which was made on State highways and the section last above quoted clearly indicates that it is, tke intention of the Legislature to fully
Hon. Geogre A. Hi&&t, page
oompensate and reimburse counties and defined road districts for all moneys previously expended on highways constituting a part of the State.HQhway System.' Nowhere in the'law, do we find provision for se@&g.down the previously determined ob- ligation of the Boara%nder circumstances such as are reflected from the facts stated in your letter.
The instant bonds appear to be eligible for partlcipa- tion in a certain percentage of their par value and such ineli- gible portion thereof is, of course, the continuing obligation of the county. Therefore if the county acquires any of su& bonds at less than their par value we are inclindd to the view that such saving as is effected thereby should accrue to the county and that the Board xi11 still be obliged to gay such portion of the debt as it had previmsly determined to be eli-
ible for participation under the provisions of House Bill Ihe think this conclusion equally applicable to the pay- f!88. .: ment of defaulted coupons appurtenant to the bonds.
.: ..~_ _,._ . ,. L.~"' . :You~~e~%herefurs ad&sed that'in I&r o$inion'the ay-' .:'I
ment by the State should be-made on the'basis of the'par v ai us of the maturities in default., '. So...long.. as' the methods adopt&by ~ho'cou&y'~.for.~he
discharge of its part of the eligible obligations sre'legal we thlrik ~the Board is tiithout authority td.inquire into the mei% : :. oda employed.. ‘At tiie.time the bonds ware. made eligible.for
participation the Board;set aside such funds as were conteni- plated to properly reimburse snd compensate the county and such previously determined obligation cannot be affected by a subse- qusntddiminishing of the countycs portion of the ,bonds.
Trustjng that the foregoing fully enswers your inquiry, we are
Yours very truly LETTDFtREY GENERAL OF TEXAS dpP~ovED J-u'r, 25, 1941 /s/ Grover Sellers B .,'s/ Clarence E. Crowe l7IRRl' ASSISTANT C fl arence E. Crowe,'Assistant ATTORNEY GENERAL
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