E ATTORNEY GENERAL
OF TEXAS
Auwrnl 11.-rExAs
June 1, 1949
Ronorable Jesse James Opinion No. V-038
State Treasurer
Austin, Texas Re: Whether bonds to be issued
mder Sets. 17 and 18, Ar-
tic10 VII, Constitution of
Taxi&s,are eligible as col-
Dear 3*: lateral for State deposits.
opinion of the Attorney Genepal 8s to wnetner the bonas
to be Issued by The UniversSty of Texas and the Agricul-
tural an& Mechanical College of Texas under the authority
of Section 18, Article VII, Constitutionof Texas, come
within the requirements of Article 2529, Vernon.'sCivil
Statutea, so as to make such bond eligible as collateral
for State deposits. You also ask whether the bonds to be
Issued by the several colleges under the suthoritg of Sec-
tion l? of said article are likewise eligible.
Article 2529 designates the type of obligationsor
securitieswhich are acceptableas such collateral, To be
eligible, the bonds in question would have to come within
the scope of the following language of the statute:
nbonds of this State; bonds and other obll-
gations lasued by the University of Texas"
Section 18 ,ofArticle VII authorizes the Board of
Regents of The University.& Texas to issue not exceeding
$10,000,000.00of bor& or notes and the Board of Directors
of the Agriculturaland Mechanical College of Texas to issue
not exaeeding $5,000,000.00of bonds or notes for building
purposes, and said boards are authorized to "pledge the
whole or any part of the respective interests of the Agri-
cultural and Mechanical College of Texas and of The Univer-
sity of Texas in the Income from the Permanent University
Funa, aa such interests are now apportionedby Chapter 42
a for the purpose of scouring the payment of the prln-
ii&&l and interest of such bonds or notes."
.
.
Honorable Jesse Jalgas - Page 2 (v-=83,8) :
It is clear that the bohde to be issued by the
Board of Regents of The Univemlty of Texas are eligi-
ble securities e Furthermore, it Pa our opinion that the
bonds to be issued by the Board of Directom of f;he A&-
w.~t.~;nxsi~,~r$MeobsalccLl College are eligible as bonds or
Altho h said college ia a branoh of,The
Unlveralty’of Texas“f Tex, Conat, Art. VII, Seas, 10 and
13; AFL 2607, V&.S.), we do not believe that thle fcbot
alme would make tbnsa bonds e&%@&Le,o
,. However, it ir oux c+plnloti thrt rraZd.college $8,.
8 pet of oux S$.c&egovernment, and that the State is sot-
1% la a gov~rnasntsl capacity In ocmduoti said college
fer -4Uwatioloal IMpp(Mes snd fux+shi~, 0o.l
7 8 8 bugdp
rep we in o~~~rying~i3ut such pep ek, BIE9tb
170 S.W.Zd 652 9”Ter. Goam, Ap+po1943),
t held th+t “the state“f~ ~condua,tlng
through A. & H. College its ex rlmental ~statlims, was
wt~ing in a govermWta1 oepao Pty es dletfaguiahed from
8 popr19tary, oepaolty.*
The bonds me to bs mmred by.& pXmJg6t of t$m
intereets of the aollege in the Wrmbaent mDiv9mlty Fuasil'.
alnllax to the pledge to be lpade of the interests of The
University of,Texas in the issuance of’ bonds by the Board
of Regents B The Pernmnent Ualversitf Puad Is manifestly
a stat9 f&B%.
It is, therefexe, ok o inion that the bapdo to
be issued by the BoWl of R ei The UniversfliJ’of
Texm anil by ‘the Board of 0 of the Agrieultaural~
and IUeohmQal College of Texas under Seotlon 18 of'Ar- ,
tlole VII are ~ell&lble sea~W4.e~ a8 collateral fm State
deposits undo~ 1Lzctlole 25213.
It mey be argueb t&t the 6poifioIItipn of the
“bonds ~ahd other obligatloas ibsued by the Univerelt of
T9x&Ynanmunts to an fmpiied negative of the eliglb;t 3: tV
ef bonds lsaued by other State institutions of higher
leewllne: . However, It is our opinion that the point of
this quoted language is mvely to lpeke “other obll&ionsv
of the University of Te%as ell.@ble, fov “bonds of this
State” would not include any evidence of indebtedness
other than a bond. ‘Other obligations n ,kould concelv-
‘. ably Include obligations payable fxon the Fevenuee of
.. self-liquidating properties I notes p et04 -- obligeti,ona
.* other than bonds, Howevercp Artlcls 2529 spwka of’ bonds ,@
: ef+ this State, and Sections 17 anQ ‘18 of Article VII
. ,
Honorable JeseJamee - Pago 3 (v-838)
authorice the iseuanee of the bou¶a in question,
Aa to the bonds to be issued by the several col-
leges under Section 17 of' Article VII, provision la made
f'or'the payment therefor by the levy of "a state ad val-
orem tax on property of' Five (5#)Cents" upon 811 the
taxable poperty of' the State.
We believe that what we have said oboie with
respeot tb the Agrlcultw?al and Meehanicsl College of
Texa8 a8 8 p8rt of the State of' Texas applies equally to
811 lnrtltutions of higher leaning established 8nd m8ln-
talned by the State, In other words, the State of Texas:
14 pesrformlng a governmental run&ion in the eatablish-
ment, owatlon, and msintenanae of such colleges.
Moxeover, these bonds ,are to be paid by 8 State
t&x -- a tax levied on all the taxable property in the
State of Tex88, crollected under State'law, and placed l.ri
the State Treaeury, Such tax moneys will cotistitute State
fund6, It follows that these bond8 will be State obllga-
ts.onR.
ft ia our opinion, tbeMk?re, that the bonds to
be hsued under the povieioncr of Section 17 of Article
VII wiLl be boti8s of the State of Tbx88, and 88 suoh will
be eligible as oollaterrl for State deposits under Article
2529.
Bonds to be irrued by the State education81
institutiona of hisher learning under the pro-
visions of Seotions 17 and 18, Anticle VII, Con-
stitution of Texab, will be eligible as .collater-
al for State daporltl under APtkale 2529,Ver-
non's Clvll Statutes.
Very truly yours
ATTORNEYGENERAL
OF TEXAS
IRST ASSISTANT
ATTORNEYEtHERAL