Hon. J. C. McEvoy Opinion No. V-1182
County Attorney
Waller County Re: Legality of investing
Hempetead, Texas county slnklng fmde,
operating fun&s, and
bonds fund8 ln Unlted
Dear Sir: States eeaurltles.
You have requeeted an opinion relative to the
authority of the caml80loners~ aourt to Invest oouutr
funds, proceeds iran the sale of county bonds, and alnk-
'lng funds In certain United States Government securities.
In every instance that the comml8aloners~ court
has been authorized to invest public money in v=&oua
securltlea, the Leglalature has named bonds of the United
State0 Qoverment lloong the eecuritleu in which such,
~11~ funds may be Invested. Att'y Qen. Op. o-4297 (l&t:
Artlole 708b, V.C.S. (Sea. 2 OS S.B. 19, Acts
48th Leg., X3.8. 1943, ah. 131, p.211), provides:
"That any political sybdlvlr$oa of the
State of Texas which heretofore haa ,Losued
and sold bonds and 1s unable to obtain labor
and materials to carry out the purpose ior
whloh the bonds were issued may invest Ythe
proceeds of such bonda now on hapd In de-
fense bonds or other obligations of the
United States, of ~rlca;.,pTovided,~.Isow-~ ,: ~,. "~
ever, that whenever ~uar time or snp other
regulations shall permit such pOlltloa1
eubdlvlalons to acquire the necessary labor
and materials, the obligations of the United .
Ststes in orhich said proceeds are invested
shall be sold or redeemed and the prooeeds
of said obligations shall be ueed ior the
purpose for which the bonds of any such
polltlcal subdlvlrrlon were authorized."
Article 12695-3, V.C.S. (LB. 746, Acts 48th
Leg.9 R.S. 1943, ch. 321, p. 4811, prov$dee:
Hon. J. C. McEvoy, page 2 (v-1182)
“All political subdivisions of the State
of Texas which have balances remaining ln
their accounts at the end of any fiscal year
may Invest such balance8 In Defense Bonds or
other obligations of the United States of
America; provided, however, that when such
funds are needed the obligations of the
United States in which such balances are
Invested shall be sold or redeemed and the
proceeds of said obligations shall be de-
posited In the accounts from which they were
originally drawn.”
Slnce.you state In your request that none of
the proceeds contemplated being Invested are fram,bonds
sold ‘prior to the enactment of Article 70&b, we agree
with you that its provisions have no a plloatlon to your
question. Att’y Qen. Op. O-7393 (19433.
It is noted that Articles 708b and 126ggzl;;;
enacted at the same Seselon of the Legislature.
708b provides for the investment of bond money and Artl-
cle 12693-3 provides for the investment of the balances
remaining in the various accounts of political subdlvl-
slona of the State. Therefore, It Is our opinion that
the provisions of Article 12693-3 are not appllaable to
the Investment of bond fund8 since that is speclflcally
provided in Article 708b.
In construing the provlalone of Article 12693-3,
It was held In Att’y Qen. Op. O-5278 (1943):
“The foregoing Act authorizes ‘all poll-
tlcal aubdlvlelons of the State (which ln-
eludes counties) that have balance8 remaining
in their accounts at the end of.sny fl8Cal
year to invest auoh balances ~ln defense bond8
or other obligations of the United State8 of
America. However, when euch~ funds are needed
the obligations of the Unlted State8 in whiah
such balances are invested ahall be aold or
redeemed and the, proceed8 of eald obligation8
shall be deposited in the account8 Wzun which
they were orlginally~drawn.
“In view of the foregoing Act It Is our
opinion that counties having balances remaln-
lng ln their-acc.ounts at the end,of any fl8Cal
Hon. J. C.. XcEvoy, page 3 (V-1182)
year may invest SUCh balances ,in defense bonds
or others obllgatlom~ of the United States of
Amerlca~. "
Article 779, ~V.C.S., provides:
"The Commlaalonera Courts may invest Sink-
lng funds accumulated for the redemption aad
paymnt of any bonds issued by such county,
political subdivision, road~dlstrict, or de-
fined district thereof, In bonds of the United
States, of Texas, ,or any county in this State,
or any.sohool~*dletrict or road dlstrlat of this
State, or-my Incorporated city or town of this
State; or In bonds of the Federal Farm Lo&n
Bank system, or in war-savings certlflaates,
and certificates of.indebtednees iSSUed by the
Secretary of the Treasury of the United States.
Ho such bonds shall be purchases which, acoord-
lng to their terms, mature at a date subsequent
to the tire of maturity of the bonds for the
payment of which such sinking fuad was crehted.'
Article 836, V.C.S., provides:
"The legally authorized governlng body of
any county, city or town, or the trustees of
any 8ChOOl di8triOt or SchOOl COmUUnlty, IW3y
inpeSt their re8peOtlVe Sinking funds iOr the
redemption and payment of the outetandlng bonds
of such county, olty or town, or camunlty, In
bond8 of the United States; war-savings oerti-
flc&tes;.and certlilcates of Indebtedness lu-
sued by the Secretary of the Treasury of the
United States; In bonds of Texae, or any muu-
ty of this State, or of any Incorporated olty
or towa;~ aad la shares or share aooouata a?
building and loan associations orgaaleed un-
der the laws of thlr State, 0~ Federal Saving8
and Loan A88oOiatiOll8 donlolled in this State.
where auoh shares or share acoounts are IS-
sued uader aad by virtue of the Federal SaV-
lngs and Loan Insuranoe Corporation. lo suoh
bond8 shall be purohaeed which, aocordlng to
their terms, mature at a date subsequent to
the time of maturity of the bonds for the paJI-
meat of whloh suoh sinking fund was oreated.
- .
Hon. J. C. MccEvoy, page 4 (V-1182)
In view of the above articles, it was held In
Att'y Qen. Ops. O-3329 (1941), O-4413 (1942), and O-4621
(1942) that aurplue accumulations In the sinking fund of
a bond Issue may be Invested In United States bonds, but
the principal raised from the sale of bonds can only be
us&d for the purpose for which bonds were voted and aM-
not be Invested In securltlee.
Therefore, you are advised that the proceeds
raised from the sale of bonds issued subsequent to the
effective date of Article 708b which oonatltute the bond
principal cannot be Invested In United State8 SeCuritieS,
but the surplus accumulated In the sinking fund may be
Invested In bonds OZ the United States. You are further
advised that the county may invest balances remaining in
the various county funds at the end of any flSCa1 year
in defense bonds or other obligatlone of the United States
Qovernment . However, when such funds are needed, the ob-
ligations of the United States in which such balazlues are
invested must be sold or redeemed aad the proceeds of
said obligations deposited In the aooounte SPOn whloh
they were orlglnally'drawn.
The proceed8 f&m the sale of bonds
Issued subsequent to the effective .date of
Article 708b, V.C.S., (April 12,! 1943) which
constitute the-bond prlnalpal caljnot be in-
vested in United States eecurltiea. Surpluses
accumulated in the elnklng fund, however,-may
be invested ln bonds of the United States.
Balances remaining in the varloua'county fIUld8
at the end of any flac&l year may be InVeSted
In bonds of the United States Qovernnient. When
these funds are needed, the obligation of the
United States in which the balances are in-
vested must be SOId or redeemed and the pro-
ceeds of the obligations deposited ln the ao-
counts from which they were Originally drfWn.
Arts. 708b, 779, 836, and 12693-3 V.C.9..
Att'y Qea. Opa. O-3329 (lgbl), 0-h (l&),
Hoxi. J. C. McEvoy, page 5 (v-1182)
, 04621 (lg42), o-5278 (lg43),
APPROVRD: YOUl’S very truly,
J. C. I)aViS, Jr. PRICE DANIEL
County Affalrs Dlvlsloa Attorney Qeneral
Qeorge W. Sparks
Bond Dlvialon
JeSSSP. LIltOn, Jr.
ReviewwingAssl8tant
Charles D. M&hews
First As#;iStStit
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