                                              A




Opinionconstruingand~holding:

1. That a commissionerscourt,doesnot have the authorityto
   enter into an agrementeitherin or out of court to acoept
   refundingbonds bearinga lower rate of interestin lieu
   of bonds held in the PermanentSchool B&d of the county.

2. That a commissioners'court-doesnot hare the authorityto
   enter into an agremsnteitherin or out of aourt to acaept
   a discountof past due interestaocruedon bonds held in
   the PermanentSchoolFund of the county.



                                                     July 14, 1939

HonorableE. A. I'Wxon
GountyAttorney
Crosbycounty
Crosbyton,Texas

Dear Sir1                       Opinioa hb. O-909
                                Rer 'duthorityof a Ccmmissioners' Court
                                to enter into an agrementeither in or
                                out of court'toacaept refundingbonds
                                bearing8.lower rate of interestin lieu
                                of bonds held in the permanentschool
                                fund of the county;and toaccepta dis-
                                count of past due interestaocruedthere-
                                on.

          flehave your letter~ofMay 30, 1939, requestingour opinionin
answer to t‘3 followingquestions8

            1. Can the Commissioners' Court legallyenter into an
               agwrmenteitherin or.out of the FederalDistrict
               Court to acceptrefundingbonds bearing 3% interest
               in lieu of bonds now held?

            2. Can the Cormnissioners'Court legallyenter into any
               agreementeitherin or out of the FederalDistrict
               Court to accept 606 on the dollarfor all past due
               coupons,includingthe ooupons'dueJanuary1, 1939,
               and July 1, 1939)
                  A:                              4
                                                               f
                    I



Hon. E. A. Watson,Page 2 (O-908)

             The faots underlyingyour quelstionssre briefly as follonsr
The permanentschoolfund of Crosby County owns #15,000.00City of Book-
er, Texas, Bonda,~which were acquiredas an investmentfor such fund pur-
suantto Section6, ArticleVII, of the Constitution,   and Article 2824 of
the RevisedCivil Statutesof19261 that the bonds bear interestat the
rate of 5-l/2 per cent per annlpp:
                                 that the interestdue on said bonds is
from four to six years' delinquent,and that $2,OCC.O0of the principal
is likewisein default. Further,that suit thereonhas been filed in
Federal Courtat Amarilloin an effortto collsctsuch past due secti-
ties. This action has been taken in behalfof Crosby Countyand other
creditorsof the City of Bookerwho also hold maturedand unpaid items
of indebtedness.Further,the valuationsof the City of Bookerhave
been decreasedby more than 5% sincethe indebtedness   vms created. Bow,
by way of adjustment,the City of Booker is proposingto issue refunding
bonds bearingintsisstet the rata of S$',and to liquidatethe past due
interestat fifty centson the dollar.

              The laws of Texas pertainingto the inveshnentof permanent
 schoolfunds imposea trust upon the countiesto safeguardthese funds,
 snd only permitthe use of the earningsthersframfor the operationof the
 sohools;they likeqiessprescribethe type of investmentsthat can be made
 with said funds.

             With respectto lands grantedthe various countiesfor aduca-
 tional purposes,Section7, Article VI, of the Constitution,
                                                          provides,in
 part, that:

                  "Said lands and the proceedsthsrcof,when sold,
             shall.beheld by said countiesalone &strust for the
             benefitof the publio schoolstherein3said proceeds
             to bs investedin bonds of the kited States,State of
             Texas,or countiesin said State, or in such other se-
             curitiesand under such restrictionsas may be prescrib-
             ed by law; and the county shall be responsiblefor all
             investmentssthe interestthereonand other revenue,
             except the principal,shall be availablefunds."

              Article2824 of the RevisedCivil Statutesof Taxas re-enacts
 the above law, and authorizesthe investmentof such proaeedsin other
 bonds not theretoforeauthorized. T,headditionalauthorization under th$s
 Article includedbonds of cities,towns and villagesof this State.

             Section55, Article III, of the Constitution,statesr

                  "The Legislatureshall have no power to re-
             lease~orextinguish,or to authorieethe releasing
             or extinguishing,in whole or in prt, the indetied-
             ness, liabilityor obligationof any incorporation
             or individual,to thie State, or tc any ccuntyor
             othermunicipalcorporationtherein.'
Hon. E. A. Katson, Page S (o-909)



            In our opinionthe foregoingla* bears directlyupon the
propositionpresentedby your questions,and we find adequateauthori-
ty thereforin the cases. See Delta Countyvs. Blackburn,23 S.W. 418;
Comanche Ccuntyvs. Burke,166 S.W. 4701 Rigginsvs. Post, 213 S.W. 600;
and City RationalBank vs. EastlandCounty,12 S.W. (2d) 662.

             After carefulconsideration  of the decisionsin the above
cited cases,and a study of the languageused,we have reachedthe con-
clusionthat the Cosssissioners' Court does not have the authoritytc
enter into any kind of an agreement,eitherin or out of court,to relin-
quish or releasethe obligorfrom a full performanceof his or its part
of a contract. In supportof this conclusionwequote from the case of
Bland,et al., vs. Orr, 39 S.E. 558, whereinChief JusticeGaines,speak-
ing for the SupremeCourt,said:
                 "It is sometimesto the interestof a creditor
            to compoundhis claim,and countiesare no exception
            to this rule. It would xeem,therefore,that author-
            ity to receive,in satisfactionof a debt due a county,
            somethingother than the full amount of money, ought
            to have been given to some of 'its officersor agcntsJ
            but it is clear,we think, that the Legislaturehas not
            lodgedthe powerwith the Cmsmissioners'  Courts,whether
            purposelyor not xc need not inquire."

            Further--
                 "Re have found nothingin the laws existingat the
            time the presentConstitution was adoptedwhich empowered
            the County Courtto ccmpounddebts due the county,or
            which gave them any controlover such debts."

            Wherefore,the twc questionssulmittedmustbe answeredin the
negative.
                                               Yours very truly

                                            ATTORHW GENERALOF TEXAS

                                            By /s/Clarence E. Crowe

CEC:s:egw                                          Clarence2. Crowe
                                                           Assistant
            'Xi.6opinionhas been consideredin conference,
approved,and ordered recorded.
                                                   /s/W. F. Moore
   APPROVED                                             W.F. Eoore
Opinionr%mitc:oe                                First AssistantAttorney
   By ?fR Ii- Chairman                                    Beneral
