Untitled Texas Attorney General Opinion

TEXE ATNBRNEY GENERAL OP TEXAS Honorable J. w. Edgar Opinion No. M-304 Conxnissionerof Education Texas.Education Agency Re: Legality of acceptance of 201 East 11th Street personal bond signed by of- Austin, Texas 78711 ficers or others of a bank- corporation in satisfaction of bond security requirement under Article 2832, V.C.S., Dear Dr. Edgar: and related questions. Quoting from your letter requesting an opinion on the above stated matter, we set out your first question as follows: "1. Where a bank-corporation, as distin- guished from a person, pursuant to Article 2832 is selected by an independent school district as its depository (treasurer), legally may the corporation tender and/or this Agency honor in satisfaction of the bond security requirement rsonal bond sig.iedby officers of that bank 'Zr*as sureties?" ._ By its terms, Article 2832, Vernon's Civil Statutes, uses lpersonl and 'corporation" synonymously,in reference to a "treasurer" who is required to be secured by bond. .The first paragraph provides, in part.: "Inany independent district . . . the treasurer of the school fund shall be that who offers satisfactory of interest on the:aver- age daily balances or time deposits for the privilege of acting as such treasurer. The treasurer when thus selected shall serve-r a term of two (2) years and until his successor shall have been duly selected andqualified and he shall be required to give bond in an amount Gual to the estimated amount of the total re- ceipts coming annually into his hands. when such bond is a personal bond;rovided, that -1479- Hon. J. W. Edgar, page 2 M-304) when a bond is executed by a surety company or is a bond-other thana persona% bond, such ,. bond shall be in an--amountequal,to.the highest dai-iy'balance-for'the-~current-biennium, to be determined.bythe governing body of such sdhool district . . .' (Bmphasis added.) The statutory bond thus provided for must be II . . read, construed, and enforced in.connection with, Andyaccording to, the statute pursuant to which it is given, and to be interpreted according to the purpose.and meaning of the legis- lative enactment." 8 Am.Jur. 709; Bonds, Sec. 4. As used above, "treasurer" includes both persons and corporations, and.such,treasnrer may'give,.a~"personal bond" in fulfillment.of the statutory.,.requirements.'Thus;,~a~bankofficer may legally ~give a personal.bond;--obligatingeither.his own assets or those of the bank;insatiefaction of the bond re- quirements of Article 2032. The-provisions'of the statute con- template the giving of such a "personal bond" as distinguished merely from one "other than personal," that is,~a "surety bond." Either type bond is a "satisfactory bond," provided given in an amount as.plainly prescribed by'the statute. Using a different approach,.~whatis meant by."personal bond* as it is used in Article 28321 The word *personalm may include.either a human individual or a corporation, a corporate entity being regarded as a person for legal purposes. 32 Words and Phrases, 307, 308, under *Person.* A *bond*, in-the present context, means a sworn promise in writing that, upon the-failure of the'treasurer to fulfill the terms of the contract undertaken,.certain funds may be looked to for compensation~of-.,theschool district for any damage caused by such failure,,ofperformance. 5A Words and Phrases, 121, under 'Bond." Therefore, a "personal bond," as used in Article 2832 is a sworn statement-inwriting by.a person (or persons) representing either himself or a corporation which he is authorized to contract for; that promises designated asset1 will be available to compensate the school district in question should the treasurer contracted with fail to properly fulfill hi& duties. So, the same result foll~owsas above, that a bank office may legally execute a personal bond in favor of the school dis- trict to secure the proper performance of duties by the treasure1 of said school district. your second question reads: - 1480 - Hon. J. W. Edgar, page 3 (M-304) "2., What responsibility, if.any rests in this Agency to ascertain the,financial worth of the surety(ies) signing a personal bond?" In reference to the bond-to,,begiven, the second paragraph of Article 2832 reads.;in part, "It shall.be approved bv the school board.and the.State.Ueuartment of Education .'.&all & notified of the'treasurer-bk the president-of-the school board filing a copy of said bond in-said.department;"‘.(Emphasis added.) This language clearly.does not plaoe'any.reaponsibility on the Agency to ascertain the financial worth of the surety. As no other-mention is made of the Agency in Article 2832 it is clear that no.such duty is imposed.by the statute. The third question you pose is: - w. 3. Assuming query No. ~1~is answered, Yes: Where pursuant to Article 27~86d,a.school dia- trict invests proceeds realized from sale of school bonds in time deposits.of,its bank- corporation,.depositorywhich.is covered only '. by a ersonal bondi.are such proceeds properly secur&rotected7" To quote from the relevant-portions of Article 27866, Vemon's.Civil Statutes: "From and after the.effective-date of this Act, any school district within-the'state which has or may have on hand any-sums-of money which are proceeds rece,ivedfrom the isaue.and sale ~of bonds of.-anysuch school distriot'i'eitherbefore or after,the effective date of-this Act, which . proceeds'are not immediatelyneeded,for the pur- poses for which such bonds were-issued and sold, may, upon order of the board of.trustees of such school district, place the proceeds of such bonds on interest~bearing time deposit;secured in the manner provided in Article 2832;Revised Civil Statutes. with a state or national bankina corporation within this state; or invest