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DAN MORALES
ATTORNEY
GENERAL April 4,1996
The Honorable Tii Curry Opinion No. DM-382
Criminal District Attorney
Tarrant County Re: Whether a district clerk may require
401 West Belknap an advance deposit of fees for service of
Fort Worth, Texas 76196-0201 process by a sheriff or constable; whether
deferred collection of the fee for service of
civil process by a sheriff or constable
constitutes a loan of credit under article III,
section 52, or article XI, section 3, of the
Texas Constitution (RQ-757)
DearMr.curry:
You have asked us whether a district clerk may require an advance deposit of fees
for service of process by a sheriff or constable in a civil case. You note that Texas Rule of
Civil Procedure 17 provides that the serving officer generally may not demand payment of
the fee for service of process in a civil case, ‘but his fee shah be taxed and collected as
other costs.” You also note that Texas Rule of Civil Procedure 126 provides an exception
to rule 17 when process is issued in a case pending in a county other than the county in
which the sheriff or constable is to serve process. In that situation, the service fee must be
paid in advance or a pauper oath must be on tile in the case. Tex. R Civ. P. 126. We do
not consider that exceptional situation in this opinion.
Taxation of costs is “[t]he process of ascertaining and charging up the amount of
costs and fees in an action to which a party is legally entitled, or which are legally
chargeable.” BLACK’SLAWDICIIONARY1460 (6th ed. 1990). Rule 17 therefore requires
that the service fee be ascermined and charged as a cost of court, not collected in advance.
See Roukhemr v. Alridge, 601 S.W.2d 51, 54 (Tex. Civ. App.--Houston [lst Dist.]
1980, writ ref d n.r.e.) (“there is no statutory authorization for the constable to require an
advance deposit of fees for service of citation”).
ln addition, rule 17 requires that the fee be “collected as other costs.” Texas Rule
of Civil Procedure 149 provides for collection of costs by execution as follows:
When costs have been adjudged against a party and are not paid,
the clerk or justice of the court in which the suit was determined may
issue execution, accompanied by an itemized bii of costs, against
such party to be levied and collected as in other cases; and said
officer, on demand of any party to whom any such costs are due,
The Honorable Tii Curry - Page 2 @M-382)
shall issue execution for costs at once. This rule shall not apply to
executors, administrators or guardians in cases where costs are
adjudged against the estate of a deceased person or of a ward. No
execution shall issue in any case for costs until after judgment
rendered therefor by the court.
See also Tex. R. Civ. P. 129 (establishing failure to pay costs within ten days of demand
as wndition precedent to authority to issue certified bii of costs), 130 (authorizing sheriB
or constable to levy upon property of debtor party “upon demand and failure to pay said
bii of costs”).
Texas Rule of Civil Procedure 143 does, however, authorize the court to enter a
prejudgment order, either sua sponte or upon a motion by a party or an interested officer
of the wurt, ruling that a party seeking aflirmative relief must give security for costs
awruing in the suit. Furthermore, Texas Rule of Civil Procedure 146 permits the party
who has been ruled for costs to elect to deposit money instead of posting a cost bond.
The court may not set an amount for the deposit in lieu of bond that is greater than the
costs that have accrued in the case. See. e.g., Hager v. Apollo Paper Corp., 856 S.W.2d
512,515 (Tex. App.-Houston [lst Dist.] 1993, no writ).
The rules of civil procedure thus expressly prohibit wmpulsory prejudgment
collection of the service fee, see Tex. R. Civ. P. 17, 149, although the court may order
that a person seeking tirmative relief give security for the fee, see id. Rule 143. We
accordingly conclude that a district clerk has no authority to require an advance deposit of
fees for service of process in a case pending in the county in which the sheriff or wnstable
is to serve process.
You also ask, contingent on this conclusion, whether the rules of civil procedure
violate article III, section 52, and article XI, section 3, of the Texas Constitution by
reqdring counties to extend credit to private parties. Section 52(a) of article III provides:
Except as otherwise provided by this section, the Legislature
shall have no power to authorize any county, city, town or other
political corporation or subdivision of the State to lend its credit or
to grant public money or thing of value in aid of, or to any individual,
association or corporation whatsoever, or to become a stockholder in
such corporation, association or company.
Section 3 of article Xl provides in part as follows: “No wunty, city, or other municipal
corporation i:_c*.!Ihereafter become a subscriber to the capita) of any private corporation or
association, nake any appropriation or donation to the same, or in anywise loan its
credit .”
You suggest that taxation of the fee for service of process pursuant to rule 17 and
delayed wllection of the fee pursuant to rule 149 may violate the wnstitutional
prohibitions against the lending of credit for the reason that these procedures amount to
p. 2086
The Honorable Tii Curry - Page 3 @M-382)
the extension of credit to the party requesting service. While we agree that taxation and
delayed wmpulsory collection of the fee for service of process amount to an extension of
credit, we disagree with your assumption that a county necessarily “lend[s]” or “loan[s] its
credit” whenever it extends credit to a vendee. It is our opinion that the Texas wurts
would hold that the mere fact that a wunty has sold goods or services for deferred
payment does not mean that the county has “loan[ed] its credit” within the meaning of
article XI, section 3, and that the authorization of such a practice by the Texas Supreme
Court pursuant to legislative authority does not mean that the legislature has authorized a
“county . . to lend its credit . in aid of, or to any individual, association or
wrporation” within the meaning of article III, section 52. In short, we believe that a sale
of goods or services for deferred payment is not a “loan of credit” as that phrase and
similar phrases are intended in the wnstitution. We conclude that taxation and delayed
wmpulsory collection of the fee for service of process is a mere extension of credit and so
does not implicate the wnstitutional prohibitions against lending credit.
To explain our reasons for reaching this conclusion, it is appropriate tirst to
wnsider other wnstitutional provisions that are complementary to section 52 of article III
and section 3 of article XI. One provision, section 50 of article III, in the foUowing
language prohibits the State itselffiom lendmg its credit:
The Legislature shall have no power to give or to lend, or to
authorize the giving or lending, of the credit of the State in aid of, or
to any person, association or corporation, whether municipal or
other, or to pledge the credit of the State in any manner whatsoever,
for the payment of the liabilities, present or prospective, of any
individual, association of individuals, municipal or other corporation
WhatsoeVer.
ln a 1960 report to the legislature, the Texas Legislative Council explained that this
section has substantially the same historical background as article III, section 49, which
prohibits, with a few exceptions, the creation of State debt,* and that this section
htion 49(a)pnwidw
Nodcbtshallbccnatedbyoronkhalf~tbeState,acccpt:
(1) toJltpplycasualdcficimcicrofnvcnuc,notcxeccdinthca~~at
~OWtiIUCtWOhundrrdthOWWddO~;
(2) torepelinvasion,
suppress
ixumwtion,or defendtheStatein war,
(3) as otlbcmisaothorizdhythisumstitotion;
or
(4) as aothom by Sohsections
(b) throogh(fl of thissection.
The6ramaJ~~on49vcrbatimfromtbcpcnasyhraniacoadihrtion,exccptfortheamountof
thedchtlimitation (whichwasonemilliondollarsin thePennsylvania
Ckmstitotion).
Tcx.Comt.art.III,
8 49 ittterprctivc
commentary.
o. 2087
The Honorable Tii Curry - Page 4 @M-382)
“prohibits the State doing indirectly what Section 49 prohibits it doing directly, i.e.
becoming indebted as a guarantor or surety for another’s debt.” 2 TFXAS LEGISLATIVE
COUNCIL, CONSTITUTIONALREVISION: A STUDY OF THE TEXAS CONSTITUTIONwfm
RECOMMENDED CHANGES 260. Also, section 51 of article III generally forbids the
legislature or any govemmentsl agency authorized by the legislature “to grant or authorize
the making of any grant of public moneys to any individual, association of individuals,
municipal or other corporations whatsoever.” The Texas Legislative Council stated in its
1960 report that section 5 I was intended to supplement the
general prohibition against expenditure of public money for other
than public purposes as expressed in Section 3 of Article 8 and the
first sentence of Section 6 of Article 16. And, in a somewhat more
general way, this section wmplunents the prohibitions expressed in
Section 3 of Article II prohibiting donations to the capital of any
private corporation or association.
Id. at 263-64 (footnotes omitted2).
There is no controlling precedent on the question of what exactly is a “loan of
credit” under the wnstitution, but there is one Texas decision that appears to be premised
on the assumption that an extension of credit is a loan of credit. The decision of the court
of civil appeals in McCarty v. James, 453 S.W.Zd 220 uex. Civ. App.-Austin 1970, writ
refd n.r.e.), appears to assume that a sale of cigarette tax stamps to a distributor for
payment due fitteen days after receipt of the stamps would wnstitute a lending of the
State’s credit under article III, section 50, if the distributor were liable for the tax. The
wurt avoided the wnstitutional problem however, by interpreting the cigarette tax statute
at issue as creating a tax obligation that arose only at the time of the 6rst retail sale of the
cigarettes and as imposing the tax only upon the tirst purchaser rather than upon the
distributor, who had only a duty to make an “advance payment” of the tax. Id. at 224,
226. Insofar as the cigarettes might be sold before the titkn-day deadline for payment by
the distributor, the court approved of the distributor’s payment a&r the time of the tirst
sale on the ground that the statute provided for an adequate bond to cover the amount of
such deferred payment. Id. at 224. Finally, the wurt recognized a rule of administrative
necessity as justifying a reasonable time for a taxpayer to pay taxes: “Regardless of when
tax liabiity arises or when taxes become due and payable a reasonable time usually and
probably of necessity, is given the taxpayer for making payment. The Legislature is the
sole arbiter of the time to be allowed.” Id. If an extension of credit by the State is a loan
of the State’s credit, the wurt did not acknowledge the apparent wnflict between this rule
of administrative necessity and the wnstitutional prohibition.
ae omittedfoomotes quote section 3 of alticlevm (Taxes &all be leviedand wlkxcd by
generallaws and for public purposesonly”) and parl of scctioa6 of articleXVI (“No appropriation
for
privatcorindividualpuposasbankmade.. .“).
p. 2088
The Honorable Tim Curry - Page 5 (DM-382)
McCorry does not establish a precedent that a mere extension of credit by the State
is a loan of the State’s credit. The McCmty court was not asked and did not consider this
issue. “A decision is not authority upon a question not raised and considered in the case,
although it may be involved in the facts.” United States v. Miller, 208 U.S. 32 (1908).
“[Share de&is [is] limited to questions raised and decided on tbll wnsideration.”
American Tran#er & Storage Co. v. Brown, 584 S.W.Zd 284, 298 (Tex. Civ. App.-
Dallas, 1979), rev’d on other grounuk, 601 S.W.2d 931 (Tex. 1980), cert. denied, 449
U.S. 1015 (1980). We therefore are not bound by an unstated assumption in that case
Furthermore, having researched our prior opinions, we have found none that
analyze the question of whether a credit sale of goods or services by the State or a
political subdivision wnstitutes a loan of the credit of the State or its political subdivision.
As the court did in McCarty, this office in prior opinions has assumed that such an
extension of credit is a loan of the government’s credit, but none of the opinions indicate
that this office actually considered whether the assumption was correct. See Attorney
Gene.ral Opiions JM-1229 (1990), Jh4-749 (1987), JM-533 (1986), h4W-461 (1982), No.
2996 (1937). We therefore must consider your question as one of tirst impression.
To aswrtain the meaning of the wnstitutional prohibitions against giving, lending,
or pledging credit, it is appropriate to consider “the history of the times” in which they
were adopted, “‘the evils intended to be remedied, and the good to be accomplished.”
Travelers’ Ins. Co. v. Marshall, 76 S.W.2d 1007, 1012 (Tex. 1934). In a nineteenth
century case, Cify of Clebume v. Gulj, C. & S.F. Ry., 1 SW. 342 (1886) the Texas
Supreme Court explained the historical background of section 3 of article XI as follows:
Section 3 of article 11 of the constitution prohibits municipal
corporations from making appropriations or donations or loans of its
credit to private corporations. The object of this provision was to
deprive municipalities of the power possessed by them under the
constitution of 1869, in the exercise of which many counties and
towns in the state assumed burdens not yet discharged, in
anticipation of benefits never reahxed. The increase in population
and values expected from railway wnnection in many instances never
came; and the tax, not lightened t?om these sources, depressed
values, prevented immigration, and became a curse to the localities
which had invited it as a blessing. In localities in which the delusion
had not been dissipated by experience, the people were still
stimulated by false hopes and fraudulent assurances to make
extravagant donations to coveted railroads. While the power lasted,
corporate greed found local pride and ambition an open way to
municipal revenues. The scheme was generally w nstmmtated by a
contract, by which the railway company bound itself to construct its
line through a county, or in a given distance of a town, in
consideration of so many thousand dollars of negotiable bonds of the
county or town. This section deprived municipalities of the power to
p. 2089
The Honorable Tim Curry - Page 6 (DM-382)
make such contracts. Its terms are broad enough to prohibit a city or
town, in its wrporate capacity, f+om appropriating its revenues, or
using its credit, to obtain right of way and depot grounds for a
railwaycompany....
Id. at 342.
Railroad investment failures like those just described were occuning in much of
the burgeoning nation during the middle nineteenth century. Other states responded with
wnsthutional limitations similar to the Texas provisions cited above. According to one
author,
[t]he first state wnstitutions and the Constitution of the United
States imposed no limits on the extent to which the govexnments they
created might incur debt. Until 1840 no state constitution had
imposed any limit on the authority of a state to borrow. Behveen
1840 and 1855. however, in reaction to the fmancial mismanagement
of early nineteenth century state legislatures, the constitutions of
nineteen states were amended to include such restrictions. The
practice spread until at the present time the constitutions of all but
five states of the Union limit in some way the authority of the
Legislature to incur public debt. . .
[Such constitutional restrictions] represent popular reaction
to more than one period of “boom and bust” in American history
during which state governments borrowed heavily to invest in
inte-rnal improvements, financial institutions, railroads, canals and so
on during the boom, only to face great difficulty in meeting their
obligations during ensuing “panics.” .
BYRON R. ABERNETHY,CONST~I’UTIONALLIMITATIONS ON THE LEGISLATURE 54-55
(University of Kansas Publications, Governmental Research Series No. 20, 1959),
reprinted in 2 TEXAS~GISL.ATNE COUNCIL.,supra, at 237-38.
Another author explained as follows the various constitutional restrictions that
were added to state constitutions in reaction to the public investment failures of the last
century:
Debt limitations, provisions requiring electorate approval of
borrowing, prohibitions against the state’s becoming a party to any
work of internal improvement, and prohibitions on financial aid to
private enterprise were the principal constitutional limitations which
emerged. Three principal types [of prohibitions on 6nancial aid
to private enterprise] predominate. Fi and most wmmon, is the
clause-refmed to herein as the credit clause-which provides that
the credit of the state and of its political subdivisions “shall not in any
p. 2090
The Honorable Tii Curry - Page 7 @M-382)
mamter be given or loaned to or in aid of any individual, association
or corporation.” A second type, almost as fashionable as the tirst, is
a chmse-referred to herein as the stock clause-which prohibits the
state and political subdivisions from becoming stockholders in any
corporation. These two provisions were a direct response to two
wmmon methods of providing public financial assistance to
railroads. One method was public guaranty of railroad bonds, which
in some instances took the form of an exchange of railroad bonds for
gove.mmental~obligations, the latter then being sold on the market by
the private corporation. In reality, the railroad was the principal
debtor and the more am-active public credit was made available only
to assist it in raising the necessary capital. As a variant of this
pro&me, there were instances of the donation of county and
mtmicipal bonds to railroad wrporations. The credit clause was
designed to ehminate these forms of financial aid to private
enterprise. However, in the case of the political subdivisions, the
other method-stock subscriptions--was by far the most common
form of 6nancial assistance. Typically railroad stock was exchanged
for public bonds, the latter, of wurse, being duly sold by the
corporation on the market. Even though the public stock
subscriptions were almost universally financed by borrowing, the
legislatures and courts of the time drew a clear distinction between
an exchange of bonds for bonds, prohibited by the credit clause, and
an exchange of public bonds for railroad stock, which was viewed as
a form of joint venture in the business of railroading not prohibited
by the credit clause. This distinction made necessary the stock clause
as an additional wnstitutional safeguard against public financial
assistance to the railroads.
The credit and stock clauses, however, did not erect any barrier
against loans or donations iinanced out of current taxation, or against
gifts of land. A number of states, therefore, adopted additional
prohibitions barring this type of aid, even though it did not occur in
signiticant proportions. This third type of clause, somewhat less
wmmon than the credit and stock clauses, varies in wording from
jurisdiction to jurisdiction. Pennsylvania’s is typical in wmmanding
the legislature not to authorize any political subdivision “to obtain or
appropriate money for . . any corporation, association . or
individual.”
David E. Pi, State Constitutional Limitations on Public Industrial Financing: An
Historicd andEconomic Approach, Ill U. PA. L. REV. 265, 278-79 (1963) (footnotes
p. 2091
The Honorable Thn Curry - Page 8 @M-382)
~mitted).~ The author also noted that the phrase “lcndmg of credit” was very “popular in
the nineteenth century but now [is] relatively obsolete.” Id. at 280. Although the author
described two examples, public guaranties of railroad bonds and donations of public bonds
to railroad corporations, as being barred by the credit clause, id. at 278-79, he stated no
detinition of what activity constitutes “lending of credit.”
The meaning of the phrase %nding of credit” and sii phrases has been a
subject of a good number of reported decisions in various states. Texas, unfortunately, is
not one of those states.
The wurts of some states have narrowly wnstrued “loan of credit” or a similar
phrase as including only an assumption of secondary liabiity.’ A thorough treatment of
the narrow construction is found in the 1923 case of Grout v. Kendall, 192 N.W. 529
(Iowa). In Grout the Supreme Court of Iowa held that the State of Iowa would not
violate a wnstitutional prohibition against giving or lending the state’s credit by issuing
bonds for the purpose of paying a bonus to veterans of World War I. Id. at 533. The
court reasoned that the lending of credit that was prohibited by the wnstitution was only
the creation of a surety obligation:
What is meant by a loan of “credit”? When one signs an
accommodation note and delivers it to his neighbor, he loans his
credit to his neighbor. He has not created a debt to him. The
neighbor is authorized to use the credit with third parties; but he is
also under obligation to the maker to protect him against liability and
ultimately to return the note. When one becomes surety for his
neighbor and signs his promissory notes to third parties, he loans his
credit. As to the holder of the note, he has promised to pay it; but as
between him and the principal maker, it is still the debt of the
principal and not that of the surety. The liability of the surety is
always secondary and not primary. It is a liability for the debt of
another, which such other is bound to pay.
Id. at 53 1. The Iowa court found that secondary liabiity, unlike primary liabiity, seduces
the surety into the complacent belief that the surety will not have to pay the obligation, a
3NotethatbotharticleIII, section52,and articleXI, section3, includea creditclause,a stodc
chose,andan appmpriation
clause.
4De&ions wnclodingthat‘losn of credit”or a similarphrase raeam only sn asmmption of
scwndsryUahUity includethefollowing:Common CauseY.Maine, 455 A.2d 1.28-29(Me. 1983);To&
v. Pen~bania Nursing Home Loan Agency, 33 1 A.2d 198,205(pa 1975);Johns Hopkins Universilyv.
Williams,86 k2d 892,90142 @id. 1952);GruenY. Tax Commission, 211 P.2d 651.668-69(Wash.
1949)(en bane); Wisconsinex rd. WisconsinDevelopment Authority Y. Lkmmann, 280 N.W. 698, 715
(Wia. 1938).See alsoBushY.Mwtineau, 295 S.W. 9, 11(Ark. 1927)(statute pmvidiag for issuanceof
statebondsfor constrwtionof stateroadswasnotunconsititional,
for it did notprcposethat state should
lendcredit“hotonlyuseitscredit”).
p. 2092
The Honorable ‘Iii Curry - Page 9 @M-382)
beliefthat history has proved to be Ikquently unwarranted. Id. The court concluded that
the credit clause was intended to prohibit only the “delusion of suretyship” and therefore
does not prohibit the undertaking of primary obligations:
The ultimate cry of the surety is: I would not have become surety if1
had known or believed that I should have to pay the debt. This is as
true of states as of individuals. It was to remove this delusion of
suretyship with its snare of temptation that this section of the
Constitution was adopted. It withheld from the constituted
authorities of the state all power or function of suregship. It
forbade the incurring of obligations by the indirect method of
secondary Uabiity. This is the field and the tbll scope of this section.
It does not purport to deal with the creation of a primary
indebtedness for any purpose whatever. That question was letl to be
dealt with in other sections. . . .
We hold therefore, that the prohibition of section 1, art. 7, has
no reference to the creation of a primary indebtedness.
Id.
Applying this understandmg of the credit clause to the proposed state bond issue
under the veterans bonus act, the court found no merit to the argument that the bond issue
would be an unwn&itutional loan of credit:
It is urged that when the state borrows money upon its bonds for the
purpose of paying the same to the beneticiaries of the act, it loans its
credit to such beneficiary, because without the credit of the state the
bene.ftciary wuld not obtain the money at all. The argument is not
sound. The benetkiary is not a debtor all. He sustains no relation of
liabii to the bondholder either primary or secondary. The state
recognizes the beneficiary as in the nature of a creditor to whom the
state proposes to pay its recognized obligation. The state becomes
debtor to the bondholder under a primary liabiity and not a
secondary one. Neither legislator nor voter is beguiled by any
delusion that the bonds will be paid by some one else as a primary
debtor.
Id. at 533.
A broader construction of the credit clause-that “lending of credit” also occurs
when the government incurs primary indebtedness-is found in several other casesS For
Qecisions eoochding that ‘loso ofcrcdit”or a similarphraseiachrdcsaa assampuonef primary
Uahility liabilityincludeIhefollowing:V&ram ’We/j&eBomf Y.
as well as an aswmptioaof secondary
Jordan, 208 P. 284(Cal. 1922);New YorkY. WestchesterCovnryNationalBank, 132N.E. 241,245(N.Y.
1921)(issuaaceof datebondsandgift of pmaeds to railmad corporationwould be unmnstitutional gift
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The Honorable Tii Curry - Page 10 @M-382)
example, in Jarrolt v. Ci@ of Moberly, 103 U.S. 580 (ISSO), the Supreme Court
construed a credit clause as prohibiting a municipal corporation in Missouri from issuing
public bonds and using the proceeds for the purchase of a machine shop to give to a
railroad. Id. at 585. In spite of the fact that the municipal corporation would obligate
itself primarily, not secondarily, on the bonds and thus would not fall within the letter of
the prohibition against lending credit, the Court held that the prohibition should be
wnstrued %o as to give it effective operation and suppress the mischief at which it was
aimed.” .Zd.at 586. The Court explained:
Both modes of using the bonds of the municipality are equally a use
of its credit, the diEbrence being that the one is a direct and the other
an indirect way of employing the credit of the municipality for the
benefit of the railway company. It would be a narrow and strict
construction of the wnstitutional provision to hold that it prohibited
the creation of indebtedness by a municipality by a direct use of its
credit for the railway company, and yet permitted such creation by
the indirect use of it for the same purpose.
Id. at 585-86.
In spite of this lack of wnsensus on the meaning of a “loan of credit,” all of the
foregoing authorities implicitly agree that a lending of credit requires the assumption of
some kind of financial liability by the government. Other cases are explicit on this point.6
For example, the Supreme Court of Idaho stated in Engelking v. Investment
Board, 458 P.2d 213 (1969), that the word “credit” in the Idaho Constitution’s
prohibition against the giving or loaning of the state’s credit “implies the imposition of
some new financial liability upon the State which in effect results in the creation of State
@oome4econtiaoed)
of state’s eredit); willam Deering & Co. v. Peterson, 77 N.W. 568, X59-70 @inn. 1898)(becauseof
ereditchose,state“cannot bormwmoneyon itsownbondsandtko loanthemoney”);Garland v. Board
of Revenue, 6 So.402,403(Ala. 1889)(creditclan prohibits *soy aid,by issuingbondsor otherwise,
by
whicha oeeonkv liabilihris incur&. furnished bv thenunicititis namedtoorivateenterorkes”~.
%ecisions conchdingthsta lendingof creditrequires theassumption of bornekindof financial
liabilityby the govmuncn t in&de the following: WilmingtonMedical Center Y. Bradford, 382 A.2d
1338,1348-49(Del. 1978)(thereis no pledgeof statecreditwitbootincurringof pobliclegal liability
goaranteui by statetaxing power); Foster Y. North Carolina Medico1 Core Commission, 195S.E.Zd517,
525 (NC. 1973);Allen v. Tooele Cows& 445 P.2d 994,995(Utah 1968)(countywooldnol “lendits
credit”to another unless wumy mightin some eventuality becomeindebted); Uhls Y. Wyomingex nl.
City ofCheyenne, 429P.2d74.86 (Wyo. 1%7) (citydid notviolatewnstitotion by lendingor givingits
creditwhere no debt against c&y was contracted). See also XmiustriolDev. Auth. Y. Eastern Kenh@v
Region01 Planning Comm ‘II,332 S.W.2d 274, 278 (KY. 19Kl) (loanof statefundsis not loao of state
credit; sfate bcancs debtor when it loans its credit);F&bank v. Stratton, 152N.E.2d 569,573 @I.
1958)(same);Almond Y. Day, 91 S.E.Zd660,667 (Va. 19%) (creditclausewnstroedas applyingto
tmmaetions in which staleincon indebtedoem).Conha Ohio v. Bmnd, 197 N.E.2d 328, 333 (Ohio
1964).
p. 2094
TheHonorable Tii Curry - Page 11 (DM-382)
debt for the bene& of private enterprises.” Id. at 218. Thus, the court held, the
investment of existing fimds of the state in bonds, notes, and stock of private corporations
did not violate the credit clause, “for no new State debts are created by such action.” Id.
Another case applying the rule that a lending of credit requires the assumption of
some kind of tlnancial liabiity by the government is the Florida Supreme Court decision of
Nohrr v. Brevwd County ErliuztionaZ Facilities Authwiry, 247 So. 2d 304, 309 (1971).
There the court upheld, against a credit-clause challenge, a state law %uthoriz[mg] a
board of wunty wmmissioners to establish a county educational facilities authority to
issue revenue bonds for tbtancing the wnstruction of tbcilities for private higher
educational institutions in the wunty,” id. at 307. Having noted the statutory provision
stating that the bonds “shall not be deemed to wnstitute a debt or liabiity of the state or
of any such county, but Shall be payable solely from the tbnds herein provided therefor
from revenues,” id. at 307-08, the wurt applied the same rule as did the Idaho wurt in
IZngelking
The word ‘credit,’ as used in [the credit clause of Florida’s
wnstitution], implies the imposition of some new tinancial liabiity
upon the State or a political subdivision which in effect results in the
creation of a State or political subdivision debt for the benefit of
private enterprises.
In order to have a gift, loan or use of public credit, the public
must be either directly or contingently liable to pay something to
somebody. Neither the tidl faith and credit nor the taxing power of
the State of Florida or of any political subdivision thereof is pledged
to the payment of the principal of, or the interest on, these revenue
bonds. The purchasers of the revenue bonds may not look to any
legal or moral obligation on the part of the state, county, or authority
to pay any portion of the bonds.
Id. at 309
We have found no precedent for the construction of a credit clause as meaning that
a state or a political subdivision lends its credit when it merely extends credit to another.’
‘We did, however,findonecasethatdiscussestheposubilitythataraleoncrrditin~
cihwastanos mightwnstitntea prohibited lcanof credit. Thatcase,Woehingtonex ret. 0 ‘Connell Y.
Public UtilityDishict No. I, 469 P.2d 922(Wash. App. 1970).rev’d on other gnwndr, 484 PAI 393
(Wash. 1971).discussed the followingpassage fmm Wadhgton Natwol Gas Co. Y. Public Utiliv
Disbicr No. I, 459 P.2d633(Wash. 1%9) (en bane): TIE municipality, we think,may,wnsislentwith
~cicntmanagrmnqscllarddelivcrclcctricalwrgytoitsci~aadcustomersonsborttamcndit
as long as this pmcedumdoes not aliw the customerto wnv5t this wncessioninto a profitable
hypothcfaton of e&it with third persons.” Id. at 639, quoted in Wcrrhingtonex nl. O*Connell. 469 P.2d
at 927. The awl explaineditsm&Sanding that“[a] ‘pmtitable hypokcationof credit’ wnnoteato us
thewnceptofarisk4akinguseofano&erkgoodname. Ifa -oncanbeemwuIcd intoaprotitable
hypo&cationof cmdicit wouldseemto followthatan unprofitable hypothecation of thatcreditmight
alsommdtfromthewncessiongranted.”469P.2dat 927-28.You do notsuggestanydraunstaacathat
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TheHonorabieTimCurry - Page 12 @M-382)
Because the great weight of authority Tom other states uniformly construes similar credit
clauses as &erring to the assumption of some kind of 6nanciai liability by the government,
we believe the Texas courts would do I&wise and would hold that a loan or gitl of credit
does not occur when the State or a political subdivision merely becomes a creditor by
selling goods or services for deferred payment. The situation about which you inquire,
taxation of the fee for service of process pursuant to Texas Rule of Civil Procedure 17 and
delayed wllection of the fee pursuant to Texas Rule of Civil Procedure 149. does not
involve a county’s assumption of any liabiity but rather involves only the county’s sale of
a service to another for deferred payment. In such a tmwaction the wunty becomes a
creditor, not a debtor. We therefore conclude that taxation of the fee for service of
process pursuant to rule 17 and delayed collection of the fee pursuant to rule 149 do not
constitute a kran of a county’s credit in violation of article XI, section 3, nor does
authorization of such a practice by the Texas Supreme Court pursuant to legislative
authority mean that the legislature has authorized a “wunty. . to lend its credit . . in aid
o$ or to any individual, association or corporation” in violation of article III, section 52.
As we noted above, in the past this office has assumed that a mere extension of
credit by deferred collection of fees is a “giving or lending~ of the credit of the State” for
purposes of wnstitution article IQ section 50; a “lend[ing ofj its credit” by a wunty for
purposes of article III, section 52; or a “loan [ofl its credit” by a county for purposes of
article XI, section 3. This assumption dates back at least to 1937, when, in Attorney
Oeneral Opiion No. 2996, this 05ce opined that the sale of certain tax stamps for
payment by a draft payable at a iirture date “would amount to the State doing a credit
business” in violation of the credit clause of article III, section 50, and that a sale of the
stamps on wnsigmnent also “would be lending the credit of the State.” Attorney General
Opiion No. 2996, 1936-1938 Tex. Att’y Gen. Biennial Rep. 43. The opinion cites no
authority for this proposition.
In Attorney General Opinion MW461, this 051~. concluded that section 50
prohibits a state agency from deferring until the end of each month the collection of
charges for copies of public records. With no discussion of what actually constitutes the
lending of credit of the State’s credit,’ the attorney general concluded, “To defer the
payments of charges for copies of public records by means of a monthly big of the
voomotcoantiaucd)
WTJuld
indie thatanyoneis engagingin risk-taking
khavior bad 0” dofcmdpaymnt for serviceof
proass.
Qlc opinionquotesa statcmmtin an informalktu opinionnumhcmdR-2358(1951), in
which, accmding to the opinion, an ass&ant attorney gcmal opined that “‘our laws wntemplatc, it
sum, that Statecd3lcesor entaprks, the managementof which requiresthe colleaion of publiciimdsor
&argcs,shld&opemtedonacashbasis.’” AttomcyGaaalOpinionMW-461(1982)at2. The
opiniondoa notspecifywhetherthemention
of “ourlam” quotedfrom the informal letter opinion is 8
lefsmKetoanyofthccrulitclaosesinthcamstitution Wehavebmunabletolocateawpyofthe
informalleltu opinion.
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The Honorable Tii Curry - Page 13 @M-382)
accumulated charges is just such an extension of the state’s credit which is wnstitutionally
proscribed.” Attorney General Opiion MW-461 (1982) at 3.
In Attorney General Opiion JM-533, this office was asked whether a county clerk
may maintain credit accounts for fees due. The attorney general noted that the phrases
“lend its credit,” as found in article III, section 52; “loan its credit,” as found in article XI,
section 3; and “lending of the credit,” as found in article III, section 50, “appear to have
the same meaning.” Attorney General Opinion JM-533 (1986) at 3. The attorney general
then quoted the following passage from page 225 of George D. Braden’s l71e Conriifution
of the State of Texas: An Annotkztedand Comparative Analysis (1977):
Section 50 states that the legi&ture may not “give” the credit of
the state to anybody, “lend” the credit of the state to anybody, or
“pledge*’the credit of the state for anybody. . This is an involved
and somewhat imprecise way of saying that the state may not aid
anybody by lending him money; bv nrovidine him land. eoods. or
SeMces on credtI; or by guaranteeing payment to a third party who
aids anybody by lending him money or providing him land, goods, or
services on credit.
Id. at 2 (emphasis added). This office also cited an 1889 Texas Supreme Court case, C&y
of Ckburue v. Brown, 11 S.W. 404, as holding that a city would “loan its credit” in
violation of article XI, section 3, by accepting a proposed corporation’s bonds in payment
for its transfer of its waterworks to the corporation. The attorney general concluded:
In the light of the Citv of Clebume holding, we believe the
proscriptions of article llI, section 52, and article XI, section 3, mean
that county officers are not authorized - and UulIlot be authorized -
to deliver county services to individuals, associations or wrporations
on credit unless some other provision of the wnstitution authorizes it
[sic] to do so.
Attorney General Opinion JM-533 (1986) at 3. We note that the emphasized language
quoted above 6om l’?re Constitution of the State of Texas cites no authority and that we
iind no other case citing City of Clebume as authority for the rule stated as the holding of
that case in Attorney General Opinion JM-533.9
prat opinion in City o/Cle6umc, WCbelieve, involvedmom than a mere extensicn d craitt.
The eontrollii tkct the court notedin eonehldingthat the tlansfer of the city’swaterworkstoaproposed
mrporation~dhaveamountedtonothingmorrthanaloanbytbtdtyofClcburneafiucrrdittothe
proposedcorporation”was that “[t]hc agrcrment entcrcd into does not detlne the pavers, nor state the
amount of capital, of the proposedcorporation.”Ci@ o/C/ebume, 11SW. at 405. Thus, the pmposcd
emporationmight have heen undercapitalizedand emsqocntly might haw d&&cd in payment of its
operatingeds, leavingthe city with the hnrdenof payingoff the corporation’screditors.
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The Honorable Tii Curry - Page 14 @M-382)
In Attom General Opinion JM-749, this office was asked whether a wunty’s
acceptance of credit cards as payment of fees wnstitutes an unwnstitutionsl “lending of
credit.” Attorney Genera) Opiion JM-749 (1987) at 2. In that opinion the attorney
general noted with approval the conclusion of Attorney Genera) Opinion JM-533
(erroneously cited as Attorney General Opinion JM-522 (1986)) “that article III, section
52, clearly prohibits the legislature from authorizing county officers to deliver county
services on credit.” Id. at 2. The attorney genera) concluded that “[n]o ‘knding of credit’
by the county occurs” when payment is made by credit card, for a third-party lender-not
the wunty-acts as a creditor in such a tmnsaction and the wunty merely stands in the
position of a merchant. Id.
Pii, in Attorney General Opiion JM-1229, a consolidation of two opinion
requests, the attorney general was asked whether a county may sell gas and Abelproducts
on a thirty-day account with monthly big for accumulated charges and whether the
State Law Library must receive payment before sending requested photocopied materials
by next-day delivery or t&hnile transmission, as opposed to enclosing a bii for charges
along with the copies. Attorney General Opiion JM-1229 (1990) at 2. The attorney
general assumed the wrrectness of the statement in Attorney General Opiion MW-461
that ‘“[t]o defer the payments of charges for copies of public records by means of a
monthly big of the accumulated charges is just such an extension of the state’s credit
which is wnstitutionally proscribed.“’ Attorney General Opiion JM-1229 (1990) at 2
(quoting Attorney General Opinion MW-461 (1982) at 2). The attorney general then
concluded that a loan of credit does not violate article III, section 52, or article XI, section
3, ifit %ccomplishes a public purpose and is accompanied by controls that ensure the use
of public credit for a public purpose.” Id. at 8.
In light of our conclusion above that a mere extension of credit by deferred
collection of fees in a sale of goods or services does not violate the cradit clauses of the
wnstitution, we disapprove of any statement or implication to the contrary in Attorney
Gend Opinions No. 2996, MW-461, JM-533, JM-749, and JM-1229, and any other
prior opinions of this office. We caution that an extension of credit, in some thctual
contexts, may constitute a loan of credit or may implicate other wnstitutional or staMory
prohibitions.
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TheHonorableTimCurry - Page 15
SUMMARY
A district clerk is not authorized to require an advance deposit
offeesforeaviwofcitationinacase~inthew~inwhich
thesherifforwnstableistoaerveprowss. Therequirementsinthe
rulesofcivilprocedunthatfeesforsaviceofprocessbyash~or
wnstable be taxed as costs and that such costs be collected by
execution only after judgment do not constitute a lending of credit or
a grant of a thing of value in violation of the Texas Constitution. We
disapprove of Attorney General Opinions No. 2996, MW-461,
JM-533, JM-749, and JM-1229, and any other prior opinions of this
offiwinsofar(Istheystateorimplythatamrecnditsaleofgoods
or services by the State or one of its political subdivisions violates the
credit clauses of the constitution.
DAN MORALES
Attorney General of Texas
JORGE VEGA
Fii Assistant Attorney General
SARAH J. SHIRLEY
Chair, Opiion Committee
Prepared by James B. Pinson
Assistant Attorney General
p. 2099