OFFICE OF THE ATTORNEY GENERAL OF TEXAS
AUSTIN
QDULOCMucl4
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Eonorebla ?;illIem 1. Kerr :
District Attorney
Feccrs, Texas /--J-l\
Dear Sir:
a 8 tru.etae
e Board of DI-
d Bluff fi’ater
1940 you rendered
Yy inqdry then wa6
o tho rights of ouch district to give a
nortgace b'; the terms or whloh all property, including
right to Impound, store and distribute water, .wes
plodged to secure the pa-lnent of bond obllgatlona,
ths sold nortgaee provld 3ng that poaaesalrm and poa-
eesacry right6 should Raan toa bank as trustee upon
default in obligation; and
1
i
Honorable %‘IllIa~ L. Kerr, Pago 2
“(b) AsBurnIng that such right would exist and
that on derault a bank could euooeed to all rights
or suoh dlstriot, then would the reaoonable rules
and regulations of the district prevell and under
euoh reasonable rules and regulations OGuld oriminal
proseoutlon be conducted where the subject matter oi
auoh ruloa, phyaloal property and Impounded water,
hed pasrred to a bank aa truetee.
n . . .
*The said dlstriot, acting by Ita off’icera, oxe-
outed a trust indenture by the terms of whloh auoh dla-
trlct sold, oonvsyed, assigned, traneferred and oon-
firmed unto the truates therein named forty-three par-
cels of land (the reservoir site.), Its permit No. 1217
to appropriate unapproprlatsd waters of the Peoorr River,
Ita hydro-eleotrlo plant, tra:namiaaIon line@, etc., and
g
“‘All other propertlea’, real personal or nixed
kk ::: and all right8 of way, franchises, water rights
and In faot everything oonneotod with the proper-
-7.~ ties and system of the eald dIstrIot.c
“The said Instrument was exoouted and delivered to
seoure and Inaure the payment of a bond Iesue therein
dssorlbed, and, I as8um, was executed under the author-
ity or apparent authority of Article 76076, Sections 20-
21 and ZlB, whloh authorized a water power control dls-
trlot to ‘pledge and ilx a lien (on) and mortgage any
property* etc.”
The only quarrtlon with whIoh you could bs ooncsrned,
and the only question wblch will be treated In this opinion,
Is the right of tho El FRAONstlozal Bank, El Paso, Texas, a8
trustee, to enforoe the reasonable rules and regulation6 as
promulgated by the Board of Direotora or the Rsd Bluff Rater
Power Control Dlatrlct. Therefore, may we restate your ques-
tion to road:
Kay the raaaonable rulee end regul.ations ae
promulgated by the Board of Directors of ths Red
Bluff Water Fower Control Dietriot be enforced by
the El Peso National Bank, gl:PBao, Texas, truates?
..
74
Honorable ?!illlam 1.. Kerr, Pa&s 3
Shortly after the receipt of the opinion requoat
from Ronorable Robert D. Fenn, County Attorney of Reeves
County, Pecos, T8xa8, this Dopertment received a very ex-
haustlve brief rron the law firm, Rurpes, Burgea & Soott,
Attorneys at Law, 21 Paso, Texns, on the !;uestIon aa to wha-
ther or not the rules and regulationa as ‘promulgated by the
Board of Directors of the district could form the baols of a
orimlnal proseoutlon. (@pinion ho. o-S.414).
For additional facts, may we quote from tho brief
0r Burges, z3urgse E< Scott. OS follows:
“The fed Bluff dam, reeorvolr, lrrlgatlon ena
power eyatems represent an investment ofi more than
twc millions of dollars. ThO prOjeOt ti3B COnStNOtCPd
with the proceeds of three bend issue a. Fractlcnlly
all of these bonds art) held by then Reconstruction
Flnanoe Corporation. The first is,%8 of bonds IB se-
cured by a pledge of all the proparties of the Dls-
trlct, as well as the tax revenuea and all other In-
,P. come of tho .DistrIct, while the aboond and third ls-
au86 are tax obligations. , . .
“ITIor to January 1940 the Red Bluff DIatrIct had
defaulted in the payment of both prinolpal and Inter-
est on tho bonds held by the lioconstructlon l?I.nance
Corporation. Acting’ under the term6 and ~rovislons of
the indenture seauring the rirst bond lesue for ;‘1,050,-
ooo.co, the Reconetructlon Finance Corporation requested
the 21 t’asc Natlcnal Rank, Trustee under the indenture,
to demand that poasesclon cf tho D~strlctqs lxopertles
be delivered to the Trustee. Such demand WRSmade, and
abwt January 11, 1940, the Directors of the District
voluntarily surrendered poaaaaeion. Since that time
tho Dlotrlct ,h:ar b8en oporatsd by the Trustee under the
direction cf the Eeconetruction Finance Corporation,
end hr. J. D. Shnw 1s in active mnnaf;emant a8 the Trust-
oe’s Agent. . . :(
A3 ii?~s ?olnted out in cur CDlnInn O-2414:
nurrl*‘By Article 1%, SootIon 50 of tha Conntitutlon,
the Legislature IR empowsred to authcrlze the or-
gadizkon of public or qussi-public cor.ooratIons
ohcr&ed vAth*the duty cf securing to 611 tbo Deopls all
r” cf the bonoflts of conservstlcn, protectlr.~ rl.psr1a.n
,-.Zonorable ::illlom 1,. Kerr, Page 4
rights, if any exist, while saving the water8 thrt
wculd othervilee be lost, and et the same time aecur-
lne to all of the people of the State the rlghts of
flshlng and recreation. The management and control of ’
t.heas public or quasi-pub110 oorroretlcne Is vested
eolely in e Board of Directors eleoted by the quall-
fled vcters of the terrltoky wherein such dlstrlot Is
located. Chapter 2, Title 1X?, Vernon’e Civil Stat-
utes, and amendment8 thereto.”
:?‘a are not paBalng upon the valldlty of the El Fasb
Natlonel Far&‘8 title to the phyaioel property of the Red
Muff Yeter Power Control Dlatrict, but conceding, for the
sake or the question, that the Dank’s title to said property
Is volld in every respeot, nevertheless, the ilank ,*ould be un-
able to enfcroe the rul~ea and regulations aa promulr,ated by
the district, The district, as created by the Leglalature,
is e governmental agency, a body polltic, and oor.?orate, and
(1s Buch, ezrclses such governmental functlone as conferred
upon It by law. . .
The Eank, by acqulrlng