Case Information
*1 AjWJ. 28, 1947
Hon. A. P. Spacek, Chairman
9omittee on School Districts
House of Representatives
Austin, Texas oplnioa Ho. V-168
Dear Sir:
Your request for au opinion by this dapart- ment upon the above subject matter is, 8s fbllews:
“As Chairman of the Committee on Sohaol Districts, I am submitting to you House Bill #66O by Repress,ntative C,. B. Noore f’or your considerat ion of the follow lng quest Ions :
(1) this bill is coastltutloaal If as wrltten,
(2) If this bill becomes a law, would the State Board of Ed- ucatlonhave authority change bonds not ,matured for the new refunding ~bonds islfiued by the s,atne lncorporat ion. to Nouae Bill No. 660, 50th Legis-
The title lature Is “An Act Amending Article 2789 of the, Revised Civil Statutes af t’he!, State of Texas, as amended by Chapter, 32, Acts:,uf the Regular Session of the 43rd leg- and as ‘further amended by Chapter Acts islature, bf the Regular $f the 411th bgislature; 8aebion and declaring au amergmoy.
Thla titU s,tates one subject--the amending of the Re,vrise.di Civil of Article as, Statutes aama has be&n ac+en.&ed+ atid, the references contained *2 Bon. A. P. Spacek, Page 2, V-168
therein and in nowise misleading. It is are accurate, suf f ielent e
The amendment contained in the body of the Bill Is an exact reproduction on Article 2789, as the same now exists, save oaly the Bill omits the final words,,of limitation contained in the present law, to- wit : in case the rate of Interest on the new bond8 19 noi less than tha rate of interest on the bondr for which they are exchanged, ”
While the title states an appropriate subject 2789 that would be consti- for any amendment of Artiole valid, there is injected into the body of tutionally House Bill 660 a provision that would render the Act un- const It ut lonal. We refer to the broad power conferred by the body of the Bill ia deleting the final words of limitation as to rate of interest as now contained in Art lc le 2789. form of Bouse Bill there-
In the present fore, the Bill is invalid, and If enacted into law would be void insofar as it authorlees or applies to any re- funding at a less rate of interest than that carried in the bonds exchanged. To permit the State Treasurer, upon the order of the ,State Board of Education, change bonds, not matured, held by him for the Perman- ent School Fund, for the new refunding bonds of the issuing corporation, carrying a lesser inter- est, would be to violate Section 4 of Article VII of the Constitution, which declares:
“The lands herein set apart to the Pub- lic Free School Fund, shall be sold under such regulations, at such times, and on such terms as may be prescribed by law; and the shall not have power to grant Legislature any relief to purchasers thereof O The Com- troller shall invest the proceeds of such sales, and of those heretofore made, as may be directed by the Board of Education herein provided for, in the bonda of the United States, the State of Texas, or counties or in such other securities, said State, and under such restrictions as may be pre- by law; and the State,,shall be res- scribed ponsible for all investments.
This same question arose in connection with Bill Eo, of the 48th Legislature, which sought to amend Art lcle 2789, in part, as follows : *3 Ron. R . P. Spacek, Page V-l@
or a less [11] . . . New bonds, bear&g interest, ixay when or- the aama dered by the gosernZng board thereof be either as term bonds ofi as serial issued, bonds 0 * . the wate Treasurer sh613j when requested by the govrm&inl; be&Ma bf said districta, amhaag@ baa%a net mtuced held by him for the Femacient School Fund for the new refunding bonds ismed by the same incorporation under the provibions of this subdivision, provided the interest rate shall dot be lowered or the term ex- tended withdiut the f,PasJnt of the $tate Board of Bdueat ion.
This Be rtment, in SPinion No. O-5213, held of tkw 48th ~$lslature, that Bill 1 r was cen- stitutionslly inval,i&, sayiw:
“The abave+quoted se~ction of Article VII of the CodstitutZon :Comp- vwts iki the troller, under the aireotion of the Board of Baucation the power -- jurisdibtion -- to invest the proceeds of the sales of he,r public free school landa in the bonds there- in stated, or in such other ser;urities under such restrictions as oay be Prescribed by Law D This vesiture of jurlsdiatloa is ex- clusive, and the power end discretion there- in conferred may not be exeroiaed in any other way,
“The provision that such investments in the securities therein mentioned, ‘under such restrictions as may be prescribed by law’ nec- essarily means restrictions prescribed by law in aid or furtherance of the exercise of the jurisdiction and powers confarred, and not denial or destruction thereof. Thus, the leg- islature might prescribe under this clause the relative or at&&xl* uMulbQ,a ef t,ha Btifferrat of pertnWgib36 iWostMsnt*, clarses t&3 matur- ities ena rcstes af iixtiswb~ sf such dwwiti13s, but it Would hare ~10 pcYtt%r to and the like, substitute its ~lsoseti~~ ror t&at of fkdup- troller, under the direction of the Board of E&cat iaa o
Hon. R. P. Spacek, Page 4, V-168
“the concluding words of the section above quoted are very significant. ‘The State shall ba responalble for all Invest - msnts’ can only maan that when the Board of Education, acting through the Comptrol- ler, has invested In securities authorized therein, in other words, has exercised its jurisdiction there conferred, the State shall make good any and all losses to the Public Free School Fund to the extent of a guarantor of the aecurlties. This lia- bility of the State generally Is a constl- t ut ional one, and the Legislature is power- less to absolve it therefrom. The sanctity of our Public Free Sohool Fund is such that the people through the Constitution have this emphatic manner seen Sit to protect it so far as is humanly or governmentally pos- s ible s
“When the Board of Education and the Comptroller have acted in the exercise of the power conferred upon them, and have made investments in certain within seourltLes, the scope of that power, they have exercised their jurisdiction, and the benefits of such Investments Instantly become indelibly fixed in the Public Free School Fund of the State, to the protection of which i,he State’s finan- cial resources are pledged.
It follows, from what we have said, that if Bill No. 660 should become a law, as written, State Board of Education would have no authority change bonds unmatured for new refunding bonds issued by the same issuer, but at a lesser, interest.
Rouse Bill No. 660, 50th Legislature, as it is written, if the same were enacted into law, would be in violation of Section VII of the Constitution of Tex- 4 of Article as insofar as It may authorize the exchange of bonds owned by the State Board of Educa- *5 Hon. R. P. Spacek, Page V-168
tloo for refundlrq boada issued by the but at a. lesser sams lmuer, ia- terest .
Yours vel’7 truly, ATTORNEY OXVERJU oFma . Ocle Speer - Assistant OS :wb :mr j