Case Information
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TEE ATTORNEY GENERAL OF TEXAS
Gerald C. Mann
Hon. Gaynor Kendall Opinion No. O-705 Aer Collectability of 6% Interest
State Board of Education Austin, Texas on delinquent interest coupons of
municipal bonds belonging to the Permanent Free School Fund. Dear Sir:
Under date of April 26, 1939, you submit for the opin- ion of this department the following question;
“The City of Brownsville Texas, is in default on interest coupons attache h to bonds belonging to the Permanent Free School Fund. The City Manager chal- lenges the authority of the State to collect 6% in- terest on delinquent interest coupons due the school fund.
“4 previous Attorney General advised that defaulted coupons owing to the State School Fund bear 6% in- terest on delinquent interest has been charged and collected by the State Treasurer on delinquent inter- est on municipal bonds, Mr. Runyon, City Manager of the City of Brownsville, has asked that we inquire as to your opinion in the matter. Will you please ad- vise whether 6% interest on delinquent interest should be charged and collected on behalf of the school fund?”
A particular description of the municipal bonds in ques- tion as to maturities, rates, etc., is not embodied in your letter, nor do we deem such information necessary. Your in- quiry does not involve the collectability of interest upon the principal amount of the bonds upon maturity, but rather the col- lectability of interest upon interest coupons after maturity there- of.
In answering this question, we shall assume as correct, information which we have obtained independent of your letter, the effect that the interest coupons in question contain no provi- sions within themselves for the payment of interest ‘at a fixed rate after the maturity of such coupons. This is the determina- tive fact rather than the rate of interest which the principal ob- ligation bears.
Under date of February 9, 1931, Honorable Moore Lynn, submitted for the opinion of this Department then State Auditor, the following questiont
. . .
Hon. Gaynor Kendall, page 2
“The permanent school funds of the State are holding a large amount of bonds of ‘cities, counties, is not In some cases the interest and districts,
paid when due and in other cases the principal re- mains unpaid after the due date.
“(1) When an interest coupon is not paid on the due date, after demand is made, and the coupon con- tains no stipulation as to interest after maturity thereof, has the Treasurer a right to demand, and is it his duty to demand, that the city, county or dis- trict pay interest on the past due payment after its and if so, at what rate should the interest maturity be compu ed?” t.
In a well-considered opinion amply supported by author- ities, Assistant Attorney General Soot4 Gaines ruled as follows:
“Answering your inquiry No. 1, it is the opinion of the writer that the State Treasurer not only has the right to demand, but it is his duty to require, and demand interest to be paid on past due coupons on all municipal securities held and owned by the permanent fund, after presentation, demand and re- fusal has been made by any city, county or district from whom said indebtedness is due, said interest be computed at the legal rate of six per centum per annum from the date of maturity of said interest in- stallment for which said coupon was given. This would be the case in the event provision is not made in the coupon for payment of interest thereon after maturity thereofen
To the same effect is an opinion by Assistant Attorney General Whitehurst to Gregory Hatcher of date February 7, 1930, and an opinion by Assistant Attorney E eneral Victor Bouldin di- rected to Judge Simpson, State Auditor, some time during 1935. The records of this office do not reveal any oplnion holding to the contrary.
An independent research by this Department upon receipt of your inquiry convinces us that the three opinions adverted to announce the correct rule of law upon this subject, and in view of the full and able discussion .of the statutes and authorities therein, we do not deem it either advisable or necessary to fur- ther elaborate thereon in this opinion. It appearing that you *3 Hon. Gay-nor Kendall, page 3
have copies of these opinions in your files, it will suffice to refer you thereto for guidance.
Yours very truly ATTOBNEYGENWAL OFTEXAS By /s/ Pat M. Neff, Jr. Pat M, Neff, Jr., Assistant APPROVED:
/s/ Gerald C. Mann
ATTORNEYGENERAL OF TEX4S
APPROVED: W&NI~~4"
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