                                                                 287’
          THE
                      op   TEXAS




Hon. James B. Pattison,  Chairman
Committee on Public Health
House of Representatives
52118 Legislature
Austin, Texas                  Opinion Ho. V-1163
                                Re:   Const?.tIltionality   of
                                      ccanmittee amendment to
                                      House Bill 151 to es-
                                      tablish a scholarship
                                      program of loans from
                                      State PunUs to mealcal
Bear Mr. Pattison:                    students.
             Your request for an opinion relates  to the con-
stitutionality    of a law now In effect in the State of
Mississippi    which provides for loans and scholarships  to
students desiring    to study medicine.
            You state that House Bill 151 Is now being con-
sidered   by your committee and that you contemplate sub-
stituting   in lieu thereof the Misslsslppl  plan, which for
the purposes of this discussion   is designated as House
Bill 431. You desire to know the constitutlonalltg     of
such a law under the Texas Constitution.
            House Bill Ao. 431 (Mississippi)    provides for
the creation   of a board to be known as the State f+Iedfcal
Education Board and provides for the appointment and the
terms of office   of the members thereof.     The act provides
for the employment of the neoessarg personnel to carry
out the terms of such act and provides a procedure for
granting loans or scholarships     to students who are bona
fide students and residents     of the State of Mississlppl
and who desire to become physicians.       The purpose of the
loan is to enable an applicant     to obtain a standard four-
year medical eclucation which will qualify such applicant
to become a licensed practicing     physician and surgeon.
Applicants may receive a loan or scholarship      in an amount
not to exceed    5,000.00,   to be paid in annual installments
not exceeding D1250.00 per annum.      These loans or scholar-
ships are conditioned     so that the full amount shall be
repaid to the State of Mississippi,      with four per cent
Interest   from the date of each payment by the State.
288
      Hon. James B. Pattison,    page 2    (V-1163)


                  Section 9 of the proposed House Bill 431        pro-
      vides that all payments of funds for loans or scnolar-  . a
      ships thereunder shall be made by requisition         of the
      Board signed by the Chairman and Secretary,         and direct-
      ed to the Auditor of Public Accounts, who shall there-
      upon issue a warrant on the Treasury of the State of
      Mississippi   for the amount fixed in the requisition        and
      payable to the person designated thereon, which warrant
      upon presentation    shall be paid by the treasurer      out of
      any funds appropriated     by the Legislature    for the pur-
      poses provided for under this act.         The purpose and in-
      tent of the act was to meet the emergency existing          in
      the State of Mlssisslppi     from the shortage of doctors in
      the State by Increasing the number of medical students
      from Mississippi    in the various    medical schools and in-
      ducing such graduates of medical schools to return to
      Mississippi   for the practice     of their profession.
                  You have informed us that the adaptation of the
      Mississippi   plan as a substitute   for House Bill 151 will
      provide for an appropriation     of State funds by the Leg-
      islature.
                 The question presented for determination  is
      whether the proposed bill contravenes the p~ovlsions    of
      Section 50 of Article   III of the Constitution of Texas,
      which provides:
                    ‘The Legislature   shall have no power
            to give or to lend, or to authorize the glv-
            ing or lendlng,      of the credit of the State
            in aid of, or to any person, association         or
            corporation,    whether municipal or other, or
            to pledge the credit of the State in any man-
            ner whatsoever, for the payment of the lia-
            bilities,    present or prospective,     of any
            individual,    association   of individuals,
            municipal or other corporation       whatsoever.”
                   In Sannock County v. Citizens Bank & Trust Co.,
      53 Idaho 159, 22 P.2d 674, 680 (19X),       the Supreme Court
      of Idaho was construing the provisions      in the Idaho Con-
      stitution    which said that no couutx shall “lend, or
      pledge the credit or faith thereof      or “loan its credit”
      to any lnalviaual,     association, or corporation.   The
      court   stated:
                  "In interpreting   the sections  of the
            Constitution   in question,  the language
            employed must be taken and understood in
                                                                  289
Hon. James B. Pattison,     page 3    (V-1163)


     its natural,    ordinary,    general,   and popu-
     lar sense.              In the popular sense,
     lending or l&&L& money or credit is at
     once understood to mean a transaction
     creating the customary relation         of borrow-
     er and lender, in which the money is bor-
     rowed for a fixed time, and the borrower
     promises to repay the amount borrowed at
     a stated time in the future, with Inter-
     est at a fixed rate.        And that is the
     sense, then, in which the language em-
     ployed in those sections must be unaer-
     st00a,  and so understood,       no county, for
     example, shall lend or pledge its credit
     or faith,   directly     or indirectly,   or in
     any manner which would create the custo-
     mary relation    of borrower and lender."
          It is our opinion that the expenditure ln-
Valved in the plan under consideration     creates the
customary relationship  of borrower and lender and is
therefore a lending of the State's    credit within the
meaning of Section 50 of Article   III of the Constitu-
tion of Texas.
            In construing the provisions     of Section   50
and kindred provisions     found in Sections 51 and 52 of
Article  III of the Constitution,    the courts of this
State have held that the Legislature      is prohibited
from authorizing    the lending of credit or the making
of arants which are not for a nubllc.       OF aovernmental.
purpose.    Bexar County v. Linden, 116 Tex‘: 339, 220 S:W.
761 (1920); Road M t 190. 4. Shelby County v. Allrea,
123 Tex. 77, 68 S.Wy2; 164 (1 4 ; Seydler v. Border,
115 S.W.2a 702 (Tex.Clv.App.     ?$3 , error ref.).     If the
expenditures   are for a pubiic purpose, they are not ln-
valid because private persons are benefited       therefrom.
Alameda County v. Janssen, 16 Cal.2a 276, 106 P.2d 11,
  50 A L R 1141 (1940)       However, the carrying out of
a gov&&ntal      fun&Lo: must be the primary object of
the grant of credit.     Where the expenditure is dlrect-
ly In aid of an individual     In his private affairs     and
results  in a benefit to the public only indirectly,         it
is not made for a public purpose.
           Certainly the preservation   and promotion of
the health of the citizens   of the State and the eauca-
tlon of physicians   are matters of public concern.   But
House Bill No. 431 goes far beyond the providing of in-
struction  and training for physicians.    We cannot escape
Hon. James. B. Pattison,     page 4   (V-1163)


the conclusion   that the direct benefits  of this bill
are conferred upon the individuals   who are the recipi-
ents of the loans, and that the benefits    to the public,
in the absence of an emergency not hers presented,      are
too indirect   to bring it within the orbit of a govern-
mental function.
            We have not found any decision      in this State
in which the question of the constitutionality         of loans
to individuals    for .an analogous purpose was presented.
In several States, the courts have held statutes au-
thorizing   loans to individuals    to be unconstitutional,
even though the Legislature      had enacted the statutes in
an effort   to promote the general welfare.       On the other
hand, the courts of some States have taken a broader
view of the scope of public purposes and have upheld
loans and grants to individuals      in various circumstanaes
where the court thought the Legislature       was justified    in
considering    the public good benefited    thereby.    However,
we believe that the decisions      of the Texas courts in
other situations     indicate  that the meaning of public
purpose cannot be broadened to this extent.
             This office,   in holding that there was no
statutory    authority for the creation    of a student loan
fund out of funds appropriated       to the Texas State Uni-
vemitg    for Negroes, stated that the presence of such
statutory    authority would raise serious constitutional
questions,    In view of Section 50 of Article    III of the
Constitution.      Lee Letter Opinion to W. R. Banks, dated
June 3, 1950.
            When a proposal for making loans to World War
II veterans   for purchase of land was before the Legis-
lature it was apparently deemed necessary by the Lagis-
lature to amend the State Constitution    before such loans
could be made. It is our opinion that a similar con-
stitutional   amendment would be necessary in order for
the %llssissippi   Plan” to be valid in this State.
                           SUMMARY
           The “Mississippi Plan” providing for
      loans from State funds to students aesirlng
      to study medicine cannot be validly adopted
Hon. James B. Pattison,    page 5   P-1163)


     by the Legislature     in the absence of a
     constitutional    amendment specifically
     authorizing    such plan.

APPROVZD:                             Yours very truly,
J. C. Davis, Jr.                        PRICE DARIEL
County Affairs  Division              Attorney General
Jesse P. Luton
Reviewing Assistant
                                      Bs
Charles D. Mathews                     Burnell Waldrep
First Assistant                               Assistant
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