           OFFICE   OF THE   AITORNEY     GENERAL   OF   TEXAS
                                 AUSTIN




‘cnorable Yverrtt R. Cain
bcunty ?ttornry, Chambers County
inehuao,  TOXOS

-‘earMr. Csln:                            oplnlon No. O-7045
                                          Rer -%ea the Chambers-Liberty
                                          Counties  Nerlgqaibn Cistrlot
                                          hare the authokitf to finrnoe
                                          end oonatruot 4 belt railroad

                                           imately hwlre    milda to X088




   a121 ‘trik*aAqrall    )&~&or   the development bf the lower
      eo Son of’,theTrlnltg 3lrtr and a part of Trinity Bay
     a&d Gq,loest~ \3 y for navigation purpoaea. It Is also
     a neae aar,y/par,tof the iIiatriot*aplan to develop the
     tcrfito
           \ y’elong the river and on the bayshore ior in-
     duetr$al and oomsrolal   purposes. The road will rirst
     be use&.&marilg    to haul sulohur from a new nulphur
     mine being developed et Z’oae huff, but it 14 antiolpet4d
     that rioe, oattls end patroleum produota in the are4 will
     also be transported to oonnaot with the routhorn ?eoillo
     Lines at Liberty.
          "The Fsdsral ‘:‘or!cs:.genoghas requested the Slstrlot
     to   44our4
               an opinion from you 4a to the Slstrtot’s legal
     authority to finanoe snd oonatruot this belt railroad.
     .icopy or the ?ederal :':or&4.igonay9sletter is attachsd.
::on.   .verett H. Cain - ?aeo 2



             "The Dietriot wsa orgnnlzod under Artlolea 826jh, 8247a
        ?nd 52476 of Vernon's imnotatod Tex44 %atutea, snd ths
        sreatlon or the Xatriot has heretofore born approved by
        your Zeoartmont in OOMOOtiOn with the 144UOnO4 of 5100,000
        :levlqatlonAid 3ondr early In 1945.
              "The iYlstrlotla apooliloally authorized by Qotlon 1
        31 .!rtlolo8247s to aoqulro, purohaae, oonetruot  and opsrato
        1. ..belt railroads...., and everything appurtenant thereto,
        together with 411 othsr feoilitler or alda lnoldsnt to or
        ua4rul In th4 opsratlon or development of the Dlatrlot’s
        torts and waterways or in eld of navigation and oomnero~
        thereon....' The Xstriot proposes to Issue revonuo bonds
        untisrthat atatuto for the puf~$lfrof fln4nolng the oon-
        :truotlon or the belt line.

     The aooy oi the Pederal Yorks ;igenoy*sletter, which you statad
'J'Sztceohed to your requoat, was never received by this oiiIo4.

     irtlale 82678, Vernon's Annotated     Civil Statutes, provldos in
72rt 69 follows:
               $9"40 , 1. Any navicatlon dlatrlot heretofor organized
        or heraartierto bs organized undar any of the provlslons
        of the Constitution or laws of the Ptate of Texas, In
        addition to all other powers aonferred by law is hereby
        !:lvenauthority and shell hereafter ham powor in ths
        nonner heroinafter provided to aoqulro, purchase,     oonatruot,
        enlarge,    ortend, rspolr, maintain, operato or develop whorvca,
        dooks, warehouses, grain elevators, bunkering faollltles, be
        dlroada, floating plants, and iaollltle.4, lightorlng ieollit 3   4s
        and towing faolllti4s, and everything appurtenant thereto, to-
        gether with all other taollitles or aide Incident to or uaerul
        In the operatloa or development oi the dlatrlot*a ports and
        watsrwaya or In aid of navigation and oommros thereon.

             Toa. 3. The Eoard of Naviaation and Canal Commissioners
        of 9   such nav~tiondl~r~ct      Ica hors   T     from the
        sderalxrqenoy      Administretion-4
                                          o m       .bors or the
               Ctetea, or from any clthordepartment or agenoy oi the
        '.'nlted
        Znlted :?tates.or from any other scuroo, end In evidence thereof
        issue the notes, werrants, certifloates z indebtedness or other
        forma of obligation or suoh 21strSot rayat)lf,sol+g TT.R
        --                                                    out of -the
        revenues to bs derfvxiron    shad introvenen%a ant rao111cle5
        for the nEpos4 -Lof obtamqmds
        --.                                 to acculr4.,purchaae. CCjnstruct,
        enlarge, extecd, repair, meinGi5iY Gorate 0:i:-dbvelopwharves,
        decks, warehounes, grain elevetol:i, bunkorinG faollitlss, belt
        r?il;'oads,floatlnq clants and fscl~ltlea', li&terlnq faoiT3Xoa,
                                                                     205

Uon. herott   H. caln - paer 3


     towine,faoilitias, and everything SppUrtSASAt thereto,
     i,oq.thbrwith 811 other f8OiUti48 or 8id8 IAOidOAt to
     or usaiul IA th4 oparatiOA or d4valopmeAt of the dls-
     trict'a port8 and watorwayr or in aid of AaligatioA
     RAd OOmmb?O. thor.iA.
          "Ceo. 4. Zaoh iasu8 of obligntiona authorized
     hereunder Shall OOAStItUtO 4 SbpSrCitbaoriee SAd shall
     be ap~roprlataly designated.  C.‘uoh obligations ohaU not
     OOA3tItUt8 .A IAdebt8dn888 or pl8Qe of the oredlt of
     suoh dietriot, sh8l.lA4Par be paid in whole or in part
     out ot any fund8 rafsad or to be raioad by taxation,
     and shall oontain 8 rroital to thet offrot.*
           ““40. 5. nA)fOblI@3tIOA8 iSSue& h4reuAd4r may be
      issued gayable from snd 84our4d bl the pledge of all the
     rev4nu48 dsrirrd from the ooeretloA of the lmprotea4nte
     cad isoilftIe8 of the distriot, aroluaite of any mvenuo8
     dorived from taxation or aaa48amaAta, or may bo payable
     from and aaoured by the plodgo of only luoh r4v4nuea se
     my be derived from t&4 OporatfoA Oi the imprOvemeAts and
     faoilltlea aoquIr4d with the proo44dr of the sale of suoh
     OblIqStiOAa, Or mm7 ba payable Sr081SAd 8eOured by the
     pledge of a soboifled part of thr relcnuea derived from
     the OperatiOA Oi th8 lJQrOt4BI4AtS4Ad faOilfti88 Of th4
     dlatrlot, all as my be iworldad in the proowcll~gr
     authoriziAg the iSSUSAO4 Of auoh tbll@tiOA8.
             vao.17.   'Phi8Plotshall bS OOA8trusd 88 oU&tiatito
      authority for the ~OOO!S~lfSblllSAtOf the ~lirpOSS8heroin
      m4AtiOAad Snd I8 AOt t0 bS Oonrtrusd t0 :894ai SAP 4ti9Jt-
      fng law8 011the 8a1naaubjsot matter, it b4iAg thr purpose
      SAd b:bnt hereot to orest4 SA addltimal     and 8lt4rA8tO
      method for +h4 SOOOIII~118hlSSAtOf 8UOh 9WQO848.   'Phi8
      Aot, without rsfsranob to other statute8 of the State of
      Tame, ah811 OOAStitUtO full authority ror th4 euthorlm-
      tiOA SAd faauaAO@ Of OblIgatIoAa herounder SAd iOr the
      aocomplIahmeAt of all thIAgs herein authorized to be doAb,
      SAd no QrooesdIAg8 r4latIAg t0 th4 SuthorIzetIoA Or
      IsSusAO4 of aueh obligatfOA or the dOIAg of auah thing8
      shall b4 A4oeaaary sxoept 8UOh aa are hsrrln required,
      sAd AaIthOr the Bond and :'iSrraAt LOW Of 1931 or OAY othsr
      provisions   or the laws of the Stat0 Of TSXS8 PertiAOAt
      to the authorization or 18sua~04 oi obligations, thr
      OperatioA end meiAtenaAo4 of ports, 0aASl.aand water wsg,
      tb4 granting offraAohIs48 or permits, the right t0 eleOtion8
      or r4f4raAdum petitions, or In aAywis8 Impeding Or r4atrIOt-
      jog the oarrylaq out of tha sot8 authorized to be done
      hereunder or sots done pUrSU4At thereto.***”
:?OA. :yerett   H. coin   - Taga 4



     "4 nota that Art1018  82670 euthorlzea AaVigatfm dlatrlota to
5aoulra , purchase, and oonstruot oortaln taollltlea without tsxa-
tion and to aoouro  funds for auoh purpoeo by the lasuanoa of
obllqetlona oi the dlatrlot payable  rolsly from th4 ravenuoa to
be derived from th4 improvamanta and faoilitira of auoh dietriot.
     "'aal80 note that the Sot do48 AOt sp4oi?ioally authorize the
issusnoe  of the bonds. It is well aottlad iA thir "tat. that
countlea,  mu~loipal oorporatlona,     and pOlftfO@l aubdlviaioA8
03MOt  lSSU4   nsgotiablr bond8 urile888uoh power i8 expr6aaly @On-
ierred by law. Mere power to borrow money oarrlea       wlth it no
suthorlty to ia8ua negotiabla      bond8 therefor. 34 Texas Jurl8-
nrudence 6390 Robertson v. Rreedloro, 61 T8xsa 3161 Laaater v, Lopez,
217 --!.
       ';'*37h
     :!owevar, we do not believe that tho type obllgstlon authorlzgd
here iS a nagotiabla  fAatrUQ4At. !74 quota from Jon68 011*Bonds and
?OAd ~4O~ftfOS", vol. 1, ~4OtiOA 289, peg4 302:
             nZl~oS the status or muniolpal bands as nogbtiebl4
       seouritiaa 1s to bs datermiAad by the provlalona    OS the
      1:AiiormMegotlable InrrtrumantaLaw, it follows, as of
       course, that they must oontain the eoaeAtiela daelgnated
       by thet law, OAd sinoe the UAiiOrEIaot 18 but, iA the
      seln, a oodifioatlAn of the law QerohaAt, Suoh bond8 must
       therefore oontain the aaa4Atlal8 Of 8 A4gOtiSbl8 instrument
       as understood at oommon law. This lnoludea en uAooAditional
      promlao to pay a sum oertsln in money. If they are made
      payable only upon a oontkigenoy whloh may A4var ooour, S
      oondltion 18 thereby ln~ootad fAt0 tha prOmi88, making
      tha ultimate paymsnt problematloal, thur d4atroyiAg      the
      uAoonditloAa1 oharaotor of the agreemoAt to pay at all
      events, SAd, at the Sam8 time, daatroyiAg the Aagotiability
      of ths lnatrumanta. Tuoh a altuatloA is damonqtrated where
      the bonds err made payable 8olely out of a apaoial iUAd to be
      derived from da8ignSt6d aouroaa~ which louroas may dry up
      before they hero yielded th4 prooeadr nooessary to liquidate
      their amount in rull. Hero the prepondsranoa of judiolal
      thought ha8 arrived at the oonoluaion that auoh aA arranngem4At,
      though oreating a probSblllty that the promlsod paymant
      will be made in full, still   leavea a poealblllty that it may
      not be, aAd this poaalblllty 16aV4a the 9rOQiS4   itB4lf    UA-
      certain and, therefore, not UAaOAditiOnel~ The Aejiotirbflity
      of such bonds la not Saved by the faot that they are made
      payable to bearer."
                                                                    207
Hon. 7veratt Ha Cain   - Pago 5



       IA view  of the SOrSgolAg, you are advised that ln our
oolnlon the Chambora-Liberty Countle8 N8vlgatloA Dlatiiot
hss authority under Artlols 82470 to issue obllgtloAo oalled
-ravonuo    bond8" for the puxpoao 0s ffA8AOfAg the oonatruatlon
o? a bolt railroad.
     '2uatlng this snmwera your    ~u4atlona,     we art)


                                        Very    truly   yours,

                                  ATTOFGYOENERAL         CF ?EXX3

                                  3T:
