We quote the final paragraph of your request for an opinion as follows:

"In order to determine whether the warrant indebtedness of the Bowie County Vocational School is eligible as an ex- ception to the loan limit permitted to state banks under the provisions of Sub- section 6, Article 7, Chapter 5, Texas Banking Code, we, therefore? request your opinion as to whether such indebtedness as created by officials of the Bowie County Vocational, School, under the authority of the Bowie County Board of Education, is a legally created municipal obligation. We should also like your opinion as to wheth- er the indebtedness, whose repayment ap- parently is restricted to receipts of tui- tion fees from the Administrator of Veter- ~' ans Affairs, can be considered a general obligation as contemplated by Paragraph 6, Article Chapter Texas Banking Code." Your final paragraph is preceded by a general statement descriptive of the manner in which your ques- tion arises, a description of the nature of the finan- cial activities of the Bowie County Vocational School, *2 v-209 and references to discussions contained in letters at- tached to your request frola the'State Bank of DeKalb and the Executive Direator, State Board for Vocational Edukation.

The Texas Banking Code of 1943 was enacted as House Bill 79, Chapter 97, Acts of the 48th Legislature, Regular Semion, 1943, page‘127. Your reference is to Subdivision 6 of Article 7, Chapter 5, of that Act which $8 pub&bed as Subdivision of Article 342-307 of Vernan's Civil Statutes, The pertinent provisions of Article 342-507 provide:

"No state bank shall permit any per- son or any corporation to become indebted or in any other way liable to it in an amount in excess of twenty-five per cent (255) of its capital and certified surplus. The phrase 'indebted or in any other way liable' ,shall be construed to include lia- bility as partner or otheiwise. The above limit,atiens shall not apply to the follow- ing classes of indebtedness or liability: "6. Bonds and other legally created general obligations of'the State of Texas or of any county, city, municipality or political subditisian thereof and indebt- edness of the United States of America, the Reaematructien Finance Corporation, or other instrumentality er agency of the United States GoWmment.lt Reference is made to Opinions Nos. O-6867 and F&tce ies of which are attached hereto, hold+ in

tE: at the State Board for Vocational Education and local beards of s&e01 trustees have requisite au- thority to sponsor and administsr the schools designated to and contemplated by the G, I. Bill, and incidentally administer the fiuaancial phases of such activities. H-over, we find no authority authorieing the pledging of the credit ef either a local school district or school agency, or the credit of the State, or af the United States Qoverrment, or au agency thereof, and at- tention is called to the discussion in the attached o- pinions indicating that the operation of the program *3 Hon. L. S. Johnson - Page v&209 shall not in any wise involve the credit of either the State or of a local subdivision of the State School System.

Under the contract of the Bowie County Voca- tional School for 1946-1947, a copy of which is attached to your request, the sole income of the Vocational School is from stipulated payments of a stated amount per student. That contract, taken together with legis- lation enacted by the State of Texas and the Congress, providing moneys to be disbursed according to such ar- rangements as made by the State Board for Vocational Education and the Veterans ( Administration appears to be the only commitment of either the State or the Na- tional Government. That such a plan for financing the school has no direct relationship to the warrants which may be issued by the Vocational School authorities is obvious. Section 7 of Article 342-507, TV. C. S,, which immediately follows Section above quoted, provides:

"Any portion of any indebtedness which the United States Government, the Reconstruc- tion Finance Corporation, or any other agency or instrumentalitv of the United States Gov- ernment, has unconditionau agreed to pur- unconditionally guaranteed-as to chase or has payment of both principal snd interest." (Emphasis supplied).

Reading subdivisions 6 and 7 together, we be- lieve that similar standards should apply to the obli- gations under subdivision as under subdivision 7. It is manifest that the local school officials have neither the means nor the authority to definitely commit them- selves, the State, or the National Government, to the payment of the warrants of the school. The contract of the Bowie County Vocational School contemplates payments based upon the number of approved courses given to prop- erly certified veterans. The meeting of the expenses of the Vocational School depends entirely upon the prop- er financial management of the school within such ex- pected revenues.

In view of the indefinite provision for meet- ing such expenses, we do not believe that the obliga- tions evidenced by the warrants are of a nature contem- plated by Section The language "bonds and other le- gally created general obligationsn indicates to our minds *4 V-209 a type of obligation of greater dignity and conclusive- ness as to validity and amount. We believe that the statute contemplates securities, the validity and face value of which are not debatable and which have been duly and formally issued, creating an absolute liabili- ty for the amount stipulated, and based upon a formal act of an agency legally authorized to incur the in- debtedness, fully acknowledging the specific debt. We conclude then that the warrant indebtedness of the Bowie County Vocational School and indebtedness simi- larly created by other Vocational Schools under a pro- gram set up under the G. I. Bill are not eligible as exemptions from the loan limit of State banks under Article 342-507, V. C. S.

,SUMMARY The warrant indebtedness of the Bowie County Vocational School and in- debtedness similarly created by other Vocational Schools under a program set up under the G. I. Bill are not eligi- ble as exemptions from the loan limit of State banks under Article 342-507, v. c. s.

Yours very truly ATTORNEY GENERAL OF TEXAS BY Assistant.

APPROVED MAY 21, 1947 jiL# eaiiL.2 ATTORNEY GENERAL NMc/JMc/erc