Untitled Texas Attorney General Opinion

%-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