Honorable J. O..Ward
County Attorney
HutchinslfnCounty
Borger, exas
                   Opinion No. O-6006
                   Re: Authority of Borger Independent
                        School District to issue part of
                        bonds already voted before can-
                        .cellation of grant by Federal
                        Works Agency.
Dear ~Slr:
          Your letterof'september 6,   1945, to this department
reads as;Tollows:-.
           "The Borger Independent School District
      located in Borger, Hutchinson County, Texas,
      due to a rapid increase lnmpulatlon   and in
      order to provide adequate school facilities,
      called a special election for the purpose of
      voting a bond issue to provide these facilities.
      Through ,negotiatlonwlth.the Federal Works Agency
.     a grant.was authorized to the District of
      $250,000 provided the DiStriCt would vote bonds
      in the amount of $475,000. The bonds were voted,
      issued and approved by the Attorney,General.
      After.th.lswaa done and before any bonds were
      sold, the school district purchased land and em-
      ployed architects and had the necessary archl-
      tectual and engineering work done. There was ex-
      pended approximately $25,OOO.OO for property,
      archltectual and engineering work.
          ,"After VBDay and before any bonds.were
    , sold, the Federal Works Agency cancelled the
      grant to the School District of $250,000. The
      Board of Trustees of the School District has
      decided not to proceed with the work of con-
      structing the additional facilities at this time
                                                                / ‘-


Honorable J. 0. Ward - page 2   (o-6806)



     for the reason that without the$250,000 grant,
     the proceeds of the balance of the bonds will
     be inadequate; therefore, the additional facil-
     ities will not be provided at this time.
         ."The $25,000 spent for property and archl-
    tectual and engineering work cannot be paid out
    of the current maintenance funds, and the Board
    of Trustees wants to know whether or not they
    may legally sell enough of the bonds to pay this
    $25,000.
         "I will thank you for 'your,opinionas to
    whether or not they may legally do this,"
          On September26th, we advised you by letter that
neither this department nor that of the Comptroller had any
record of such bonds referred to in your letter.
          On September 28th you advised us by letter that you
were misinformed about said bonds having been issued. You
further stated in said letter as follows:
          t,. . . Before these bonds could be printed and
     submitted to the Attorney General for approval, and
     sold, the Federal Works Agency cancelled a grant of
     $25.0,000that had been authorized previous to the
     calling of the election. When this grant was can-
     celled the Board of Trustees realized that the
     $4'75,000would be insufficient to~provide the ne-
     cessary buildings and equipment to meet the needs
     of the district and It will be necessary to call
     an election and submit to the votersthe proposl-
     tion of voting additional bonds and this will '
     necessarily entall~considerable delay.
          "What the Board of Trustees want to know Is
     this: May they Issue and sell enough of the
     $475,000 bond Issue previously voted to pay for
     property, engineering and archltectu_alwork al-
     ready contracted for, or:will it be necessary to
     call another bond election for thenspecific purpose
     of ~votingbonds to pay the obligations already con-
     tracted.
          "For your information, I am advised by the school

                           ,
Honorable J. 0. Ward, page 3 (o-6806)



      district that the-Federal Works Agency has agreed
      to pay for .one-thirdof the expenses already con-
      tracted in connection with purchasing property and
      securing the necessary engineering and architect@1
      work, plans and spec.iflcations."
          Replying to'our request of October 5th; you have fur-
nished us with copies of (1)~Petition for School'Bond,Election;
(~2)Order of the Board of'Trustees, dated June 12, 1945, call-
ing such election for June '22, 1945; and (3) Order of July 20,- _
1945, Declaring Result of'said Bond Election.       il.
           It appears from said election order that no reference
was made therein concerning a grant from the Federal Works
Agency. It further appears from your communications that said
 Federal-Agency grant, authorized to said school district, was
 conditioned.thataald dlstrlct'would vote bonds inthe am~ount
 of $475,,000,whlch~was done. % We are furnished no facts or I'
 information showing that said bondswere voted on condition
'that such Federal grantwould be authorized. owe therefore
 assume that no such condition attached to such bonds.~' If we'
 are correct in this assumption, we know,of v reasonwhy bonds
 of the voted.lsSue cannot now be issued $n total or partial
 amounts, from which funds may be realized to provide the facjl-
-ftfPs'-for'whichthey were voted. The foregoing conclusion
 is conditioned, of course, on the legality of said~bond issue.
 The record of same has not yet been received by,thlsdepart-
ment.
          If we are ln.error inassuming that no conditions
were attached .to said bonds, as herelnbefore stated, a different
conclusion would result.
           In this.department's opinion Ho. O-2088, approved
-May 1,       we held as follow's:
          1940,
           t,
            . . . The authorities seem to hold thatthe
      approval by theelectors of the proposed bond issue
      with whatever t~erm.8,and conditions that the govern-
      ing body imposes thereon previous to,the election,
      ~creates a status analogous to a contractual,relation.
      In construing a similar order passed by a corn-       '~
      missloners~ court prior to a county-wide bond elec-
      tlon; the Supreme Court of Texas In the case of Black
      et al v.,Strength et al, 246 S.W. 79;,said:
    ,


Honorable J. 0. Ward, page 4   (.o-6806)




         "'The order would not have been made
         save with a view to Its being relied
         on by the voters. With the bond issue
         authorized by votes cast In rellance.on
         the order, as must be assumed, It could
         not be arbitrarily ignored or repudiated
         without Involving the perpetration of
         fraud or its equivalenton the voters.
         "'Under these circumstances, the order
         was, In effect, a contract with the people,
         and good faith required that the contract
         be kept.'
          "Any other rule would tend to undermine public
     confidence in the'acts of public ofricers. See also
     Golden .GateBridge and Highway District v. Filmer,
     21 Pac. (2d) 112;.Perry-v. Los Angeles, 2O3'Pac. 992. . . .'I
          A copy ,ofsaid opinion In full is hereto attached for
your Information.
          However, regardless of the fbregolng.conclusions, we
are of the definite opinion that none of said irotedbonds may
n& be Issued and sold for the purpose of paying for property,
engineering and architectual work already contracted for.
Neither can additional bonds be voted fop said purpose. These
conclusions are amply supported by the following authorities:
           In the case of Board of Trustees og,Alpine Independent
School District, et al v. Jacob, 170 S.W. 795, (Clv.App., San
Antonio), Appellee Jacob, as assignee of Phelps, sued appellant
for $400 alleged to be due for plans of a schdolhouse prepared
by Phelps at Instance of appellant. Appellant answegdf;;d de-
nied .lts authority to make the contract sued upon.
ther alleged that Phelps knew that the~money to build the
schoolhouse was to be raised from the sale of certain bonds,
and agreed that he would not charge for the plans unless the
bonds were sold and a contractor obtained who would build the
house for $16,000. Appellant further alleged in Its answer
that the bond Issue was Illegal and that no responsible con-
tractor could be found who would build the house for $16,000.
It was proved that the bonds that had been voted were Invalid
and could not be~,sold. The appellant therefore had no funds
from the sale bf bonds with which to pay Phelg&' claim.
The~opinlon refers to Art. 2839 (R.C.S. lgll), which provided
that when such bonds have been voted for, they shall be
                               ,
.   .




        Honorable J. 0. Ward, page 5    (O-6806)




        examined by'the Attorney General and registered by the Camp-~1~
        troller of Public Accounts , land,when sold to the highest
        bidder, the purchase money~shall be placed in the'county Treasu-
        ry to the credit of the school district. .The opinion-then sets
        forth the purposes as specified In said article, for which the
        money should be used; viz: :"in payment of accounts legally
        contracted fin buying, building, equipping, or repairing the
        schoolhouse, or .schoolhousesfor such'dlstrlct, or in the pur-
        chase of sites therefor.". Then follows this important state-
        ment in said~opinion:
                  ~"33 is clearly contemplated~in the law cited'
             that the contracts shall be made after the~bonds ~~:
            .shall have been issued and sold, and that.the money
             arislng.~.fromsuch~sale shall be disbursed only tb
             satisfy and meetsuch contracts." (Emphasis ours)
                  After providlng'that such bonds shall be.examlned
        by the Attorney General, and~if~approved registered by the Comp-
        troller; our present %tatute,,Artlcle 271!36,~~.c.~s;
                                                           1925;as
        amended, provides:
                  "All bondsshall bk'sold to the highest '
             bidder for~not less than their par value'~and .i':~: .':
             accrued interest, and the proceeds of such sale
             shall be deposited in the County .deposltoryfor
             the-common school districts, and in the district
             ~deposltoryfor the independent school districts, :.
             to the creditof such districts; and shall be dis-
             bursed only ,for the purpose for which said bonds
             were issued, q . .'I

                  The purposes for~which said ,bondscan-be issued are
        "for the purchase, constructio'n,repair or equipment .of'publlc
        free school building? within
                                _ .. the llmlts~of'such
                                                ^ .     districts_(com-
        mon and .inde@ndent) and tne purcnase of tne necessary sites
        therefor." Art..2384e, Vernon's Annotated Civil Statutes.
        (Parenthetical insertion ours)
                  The Alpine~School D strict case herelnabove.dis-
                                     ixpense of plans and speclfl-
        cussed further held that .the~
        cations are necessary in building a schoolhouse, and,could
        be paid for out of money arising from the sale of school-
        house bonds. Such bond money,~.however,would have to be
        the hands of the trustees at the time the plans and specl
        cations were contracted for.
    ,      I




Honorable J. O.-Ward, page 6    (o-6806)



          The case of Bone v. Black, et al, 174 S.W. 971 (Civ.
APP., Amarillo), held that a school board..cannotcontract for
a building afterthe bonds therefor are Issued but prior to their
a,    citing the Alpine Independent School District case, supra.
The following quotation from the Bone v. Black case Is very en-
lightening:
             "Article 2842 (R.C.S.1911, the corresponding
        article now'being 2787, R.C.S.1925) indicates that
        until~the bonds are sold the taxes levied to pay
        them may be discontinued by vote. Ifsbefore they are
        sold the tax should be discontinued, the bond will be
        valueless., Hence a contract before they are sold
        does not bind the fund. There Is no power insthe trus-
        tees to glve'bonds for the building. They must be sold,
        and the money placed In the treasury, and drawn out
        upon the proper order. The trustees have no power
        or authority over these bonds until they are sold. No
        discretion is vested in them when they shall contract.
        It must be done when the money is in the.traasury for
        that purpose, or Is available; otherwise, they can
        create no obligation againstthe district. We think
        It Is a general rule 'that such contract can be
        entered Into, only to the extent of funds provided
        and available for that purpose,' by trustees."
        (Parenthetical Insertion ours)
          The case of Harllngen Independent School Distrlct~v.
Page & Bra., 48 S.W; (2d) 983, was rendered by the Commission
Of Appeals of Texas, Section A, in 1932.~ .After referring to the
pertinent statutes of the 1925 codification, with then existing
amendments, Judge Crltz discussed with approval the cases of
Alpine School District and Bone v. Black, above referred to,
and quoted'at some length from the latter case. We now quote
from the concluding portion of.Judge Critz's opinion:
             "All of the statutes which confer power
        to expend ,bond funds limit the power to funds
        that %re available, and from all of the sta-
        tutes and constitutional provisions above men-
        tioned, we are compelled-to the conclusion that
        it was not the intention of the'Leglsl%ture to
        permit the board (of school trustees) to con-
        tr~actwith reference to such funds unless and
        until.they'are actually available, . . ." (Under-
        scoring and parenthetical insertion ours)
,, _..

         Honor'ablk'J.0. Ward, page 7   (0-6806)



                   In the rather recent case of City of Big Spring v.
         Ward, 169 S.W. (2d) 151, by the Commission of Appeals of Texas,
         Section A, adopted by the Supreme Court on March 3, 1943, Judge
         Brewster cited and quoted from the Harlingen Independent School
         District case hereinabove referred to. The Big Spring case ln-
         volved a city Instead of a school district; nevertheless, the
         same principle of law applied concerning contracts to expend
         bond money before such money became available. In said case
         Judge Brewster held:
                   "In the case at bar the city had no power to
              make the contract (for constructing proposed im-
              provements) when it attempted to do so, because it
              then had no money on hand with which to construct
              the contemplated improvements and none available for
              that purpose." (Parenthetical insertion ours)
                   Section 53 of Article 3 of our State Constitution pro-
         vides:
                   "The Legislature shall have no power to grant,
              or to authorize any county or municipal authority
              to grant, . ; . ; nor pay, nor authorize the pay-
              ment of, any claim created against any county or
              municipality of the State, under any agreement or
              contracts, made without authority of law."
                   Independent school districts <in Texas are municipal-
         ities with the powers conferred on them by law. Harlingen In-
         dependent School District v. Page & Bro., supra. The Borger
         Independent School District, being a municipality, was without
         authority of law to make any contract concerning the expenditure
         of bond money until such money was available. Such money could
         only become available by the bonds being approved, registered,
         m,    and the proceeds deposited, all in accordance with the
         provisions of Article 2786, Revised Civil Statutes, 1925, as
         amended, supra. Since none of'these requirements have been
         met, any contract-    contracts heretofore made by said Borger
         District were ,ultra vi,resand without authority of law. Hence,
         our conclusions are as hereinabove announced.
                                              Yours very truly
         LHF:EP:bt                         Attorney General of Texas
         APPROVED Nov. 7,1945
         Carlos C. Ashley
         First Assistant Attorney          By:s/L.H. Flewellen
            General                             L.H. Flewellen
         Encl.                                      Assistant
         APPROVED Opinion Committee
         BWB, Chairman
