Bon. George A. Hlght Opinion NO. O-3623
Chief Accountant Re: Liability of the Board on bonds
board of County and Dis- previously made eligible for partici-
trict Boaa Indebtedness ation in the county and district
Aust&n, Texas R ghway fund when such bonds have de-
faulted as to principal and interest.
Dear Sir:
tiehave your letter setting forth certain facts a&m-
questing our opinion on the question stated. The facts are:
?A county proposes t.crefund an eligible issue ,,,_
~,,
~~
:: :_ ..’ .ef,b&ds -vB.$&,‘,,are.
u ,.defan& .,.T& ~:aty &+ ._I
., ~....,:;
%
@m&aseiC:btids’of thlS’,1&3ue, at Xess than their par ~.~
,‘::~
dLlie’~aiidhave ‘.
requeatsd the ‘Boardto cr&ait the
coqty tiththa amount:the Board:set aslde~to ‘r&Ire ;
- ._. : ... .:
the .bonds.at their maturity date.’ The-:amouut set :
aside being’the ‘peri?e&ageof.each bond ‘ofWs is- .. :
sue* .&a deter@ned byethe Board, which was
: . .expended~Xri:the construction.ofa~State desgsy: :
highway or hl&iiays &xisaid county.
“It is also proposed to escrow al3 interest cou-
pans of Ws issue which are in &fault and pay #mm
as funds are Wailable ,011the basis of fifty cents
on the dollar.”
Your request 1st
“Please advlse this Board if the payments due by
the State on the defaulted principal and Interest of
this issue be made on the basfs of the actual cost
to the county or on ~thebasis of the par value of
the maturities in dafault.”
Section 6 of House BllX’~688pas@ by
Subsection (a) oft'
the .Forty-sixth
-- Legislature, Ngular Session, 1939, reads in part
as rouowm
“All bonds, warrants or evidences of in-
debtedness heretofore issued by counties or de-
fined road districts of this &ate which mature
on or after January
, . . ‘-
-. -.I
Hon. George A. Hight, page 2
date and prior to January 2,,1939 have been
designated a part of the system o$ State high-
ways :.,.. whether said Indebtednessis now
evldeuced’bythe obligation originallyissued
or layrefunding obligation or both, shall be
eligible to participate1 n the distributionof
the moneys coming into said County and District
flthway F’nnd,subject to the provisionsob this
shall participate in said County and
&a: Ik%ict highway Fuud as of the date of the
designktionof said road as a part of the State
syste& . . ln (Underscoringours) 4
Subsection c of Section 6 provides in part:
“It shall be the duty of the Board of County
and District Road Indebtedness . . . to ascer-
tain and determine the amount of indebtedness
eligibleunder the provisions oftthis.Saction
cf this ‘Act.topartic%pate~ 3.nthe mans.&.8 coc+¶ng.
: i_.... _..: ...
‘*.
into.’ said::Corinty-‘end
~Road.bisti’ict R3.g ajr.Md
. ~, . . And said’:&ligation~tosaid”amountand
extent shall be eUg%b%e for ‘paitlcipatlon ln
the moneys~coming Into .the County and .RoadR&s- .’
.:.: .xtric.t;RlghtiayFund and said ascertainment, and : Y ..
,.
dstermination shall be certified to the,county
. ’judge by said Board ,and. all -of the matured out- . 1.
.. stand%@ obligatl’ons of’said issue shall .rata-:
bly have the benefit of said participationiu
sziW moneys? Q m The.- ascertainmentand deter-
&nation by.the ,Board,.afterreasonable notgce
and ‘hearing of the amount of y. couuty or a*
ffned~~‘mad .~&Lstr%ct~:
.obligatioii e IgSble under
the proti&ons of,this Act . . ,,. .&all be fSnal
and conoluSive and &q&l ,notbe subject to re-
view in auy otherstribunal2’’
.‘.
Referring baok to Section 1 tiefind this ~langua&
‘tAnc7
it is hereby deterWed that the further
provisioneof this Actconstitute fair, just end
~equltableoomp&nsatlon,repayment and reimburse-
ment’to said c&ties’ ~amd deflned distr$ctsfor
their ‘aidand’assista@ to’the-state in the cm- .
struction‘of the.State highways. .,. And my
dischargesthe~%egally~implhedobligations of the
State ‘tocompensate,repay and reimburse agencies
of the estatefor expenses incured at the instance
and solicitationof the State as well as for ex-
penses incurred for the benefit of the State. . . ”
me sections of House Bill 688 first above quoted Con-
template full payment of that pert of the expenditureWhich was
made on State highways and the section last above quoted clearly
indicates that it is,tke intention of the Legislatureto fully
Hon. Geogre A. Hi&&t, page 3
oompensateand reimburse counties and defined road districts
for all moneys previously expended on highways constituting
a part of the State.HQhway System.' Nowhere in the'law,do we
find provision for se@&g.down the previously determinedob-
ligation of the Boara%nder circumstancessuch as are reflected
from the facts stated in your letter.
The instant bonds appear to be eligible for partlcipa-
tion in a certain percentage of their par value and such ineli-
gible portion thereof is, of course, the continuing obligation
of the county. Therefore if the county acquires any of su&
bonds at less than their par value we are inclindd to the view
that such saving as is effected thereby should accrue to the
county and that the Board xi11 still be obliged to gay such
portion of the debt as it had previmsly determined to be eli-
ible for participationunder the provisionsof House Bill
f!88. Ihe
.: think this conclusion equally applicable to the pay-
ment of defaulted coupons appurtenantto the bonds.
.: ..~_
_,._
. ,. L.~"'
. :You~~e~%herefurs ad&sed that'in I&r o$inion'the ay-' .:'
ment by the State should be-made on the'basis of the'par v aius
of the maturities in default.,
: . '.So...long..
as'the methods adopt&by ~ho'cou&y'~.for.~he
discharge of its part of the eligible obligationssre'legalwe
thlrik ~theBoard is tiithoutauthority td.inquire into the mei% :
:. oda employed..‘At tiie.timethe bonds ware.made eligible.for
participationthe Board;set aside such funds as were conteni-
plated to properly reimburse snd compensatethe county and such
previously determinedobligation cannot be affected by a subse-
qusntddiminishingof the countycs portion of the ,bonds.
Trustjng that the foregoing fully enswers your inquiry,
we are
Yours very truly
dpP~ovED J-u'r,
25, 1941 LETTDFtREY
GENERAL OF TEXAS
/s/ Grover Sellers B .,'s/Clarence E. Crowe
l7IRRl'
ASSISTANT Cfl
arence E. Crowe,'Assistant
ATTORNEY GENERAL
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