%-HE A ORNEY
May 5, 1950
Hon. Theophilus 3. Painter, President
The University of Texas
Austin, Texas OpinionBo. V-1052.
Re: The legality of invest-~
ing the Permanent Uni-
versity Fund in bonds
of common and independ-
ent sohool districts
Dear Sir: of Texas.
We quote from your inquiry as follows:
"The investments of the Permanent Uni-
versity Fund are made pursuant to the author-
ity delegated to the Board of Regents by
Artiole 259la, Vernon's Annotated Civil gtat-
utes of Texas, and by Section 11 of Article
VII of the Constitutionof Texas, as amended.
We would appreciate very much your opinion
as to whether or not the term 'School Bonda
of Munloipalitiesl in the oonstitution and
statute8 inaludes the bonds of oommon and
Independent school distriots of this State?"
The Constitution of this State by Section 11 of
Article VII, as amended, declares that the Permanent Uni-
versity Funds "shall be invested in bonds of the United
States, the State of TexBs, or oounties of said State, or
in Sohool Bonds of munioipalities, or in bonds of any city
of this State, or in bonds issued under and by virtue of
the Federal Farm Loan Aot . . an
In oonformanoe with the oonstltutional provi-
sion, es amended, Article 25918 of Vernon's Civil Stat-
utes was enacted. Section 1 of that statute provldea in
part:
"The Board of Regents of the Univer-
sity of Texas la authorieed to invest the
Permanent Fund of the University of Texas
inr
Ron, Theophilus 3. Painter, page 2 (y-1052)
Bonds of the State OS Texas;
Bonds of the United States 5
Bonds of countiea of the State of
Texas; sohool bonds of munioipali-
ties of the State of Texas; bonds
of oities in the State of Texas;”
Webster’s Rew International Dictionary, 2nd Rdi-
tion, defines “munioipality” to be:
“A town, oity or other distriat having
powers of local self-government; a munioipal
oorporation; also, the oommunity under the
jurisdiction of a munioipal government. 0 .’
In Love Y. City of Dallas, 120 Tex. 351, 40 S.W.
2d 20 (1931) our Supreme Court, speaking on the nature,
status and property rights of school dietriots OS Texas,
said :
“Sohool distriots are loo01 publlo oor-
poretiona OS the aame general oharaoter as
munioipal 00 orations. Thom aaon Y. Rlmo Ind.
So hool Dia t . “p TeX&iv.App.) 2 %9 S.W. 868,870;
Royee Ind. Sohool Diat. Y. Reinherdt (Tex.Civ.
App.) 159 S.W. 1010 (writ refused). They are
defined as quasi-munioipel oo orations and
:!;;a their powera by deleget rp on born the
a They are state sgenoie8, erected end
emplwed for the purpose OS edminiatering the
state’s system of pub110 sohoola. 24 Ruling
Case Law, pp- 562 to 565, a# 6 and 7 . e .
Cities and towns and munioipal oorporations
are OS the aama general nature as queei-muni-
oipal corporetiona, in 80 far as here involv-
ed, and the right of the Legislature to oreate,
abolish, enlarge or restriot them in their ter-
ritory or powers la, unless restrained by ape-
cial constitutional provisions, similar to the
authority of the Legislature over quasi-muni-
oipal corporations 0 Both are agenoies of the
government - the one with a more limited sphere
than the other . o .”
And from Hatcher Y. State, 125 Tex. 84, 81 S.W.
2d 499 (1935) we quote:
”
o e Sohool Diatriota, whether inde-
pendeni or oommon sohool distriota, are not
_. ‘.
Hon. Theophilua S. Painter, page 3 (V-1052)
primarily sgenaies of the state, but they
are loo61 public corporations of the same
generzl character as q unloipel corporations
. . .
Furthermore, school distriots of Texas, whether
classified as common or independent, are by statute con-
stituted bodies politic end corporate. Arts. 2748, 2780,
V.C.S.; Hatcher Y. State, aupre.
The authorities above quoted demonstrate that
sohool districts of this State are munlclpalities, local
public corporations, oreated by the State for the purpose
of conducting In their localities the certain govertusen-
tel educational functions delegated by the State.
In our opinion, the phrase "sohool bonds of
munlcipelltiesR as used in Section 11 of Artiole VII of
the Constitution and Article 2591a should bs construed
to include sohool bonds of common and independent school
distriotsof Texas. Further, that the words "OS munioi-
Palitiea" were employed to restrict the investment o?
permanent University Sunds (insofar asschool bonds are
conoerned) to investments in public school bonds as dis-
tingulshed from bonds of private school corporations.
It is important to note that the same provl-
sions in the Constitution end etetute considered herein
further authorize investment of such funds "in bonds OS
any city of thin state." The quoted phrase immedletely
Sollows the language under oonsideretlon. School bonds
of municipally controlled sohool diatriots are issued by
the city. such bonds are city obligations, oity bonds.
Poteet Y. Bridnea, 248 S.W. 415 (Tex.Civ.Agp. 1923); A.0.
apinions v-334 V-690. Being city bonds, investment of
permanent Unlvksity funds in same would olearly ba e+
thorlsed by the clause, "bonds of any olty of this &ate."
IS it were the purpose of the Constitution with
nspatt to investments In school bonda to rastrlat in-
vestments of said funds to Wore sohool bonds issued b;r
munioipelly oontrolled school districts, swh intendwent
.- ._
Ron. Theophilus 3. Painter, page 4 (V-1052)
could and, we think, would have been aocompllshed simply
by omission from the law o? that phrase ‘school bonds
of municipelities,” and leaving ttarain only the phrase
“bonds of 8~ oity of thf;s State. It Is oleer that “mu-
nioipellties end “city, as wad in the Constitution end
statutes were intended to have dlfierent meaninga from
om another.
In construing the Constitution aid statutes,
as we have, to euthotise investment o? permanent Uni-
versity funds in oommon and independent sohool district
bonds, as well as in the muniolpelly oontrolled school
district bonds, meaning Is given to the phrase “sohool
bonds of munioipallties 0” Construed otherwire that
phrase bw omes useless, having no meaning. Such a pn-
sumption should not be ascribed to the people who sdopt-
ed the amended oonstltutional provision, nor to the
Degisleture in its enactment in sooordeuce therewith.
Investments of the Permanent University
Fund may be made in the bonds of common end
Independent school distrlots OS this Stats.
Art. VII, Seo.11, Tex. Const.; APt. 25918,
Seo.1, V.C.S.
APPROVED
: Yours vary truly,
J, C. Davis, JP. PRICR DARIXL
County ASfairs Division Attorpy .Cenerel
Joe Qreenhill
FPrst Assistant
Prioe Daniel
Att orney Genepal
cBo:mw