                       The Attorney               General of Texas

                                         April    15,   1980
MARKWHITE
Attorney General

                   Honorable Wilhelmina Delco                  Opinion No. ~~-170
                   Chairman, Committee on Higher
                     Education                                 Re: Dual membership      on the
                   House of Representatives                    board of the Texas Guaranteed
                   Austin, Texas 78769                         Student Loan Corporation and the
                                                               boards      of Higher   Education
                                                               Authorities.

                   Dear Representative   Delco:

                          You have questioned the legality of appointing to serve on the board of
                   the Texas Guaranteed Loan Corporation (hereinafter        TGLC) persons who
                   also sit on the boards of Higher Education Authorities that issue or purchase
                   securities guaranteed by the TGLC.

                          The Texas Guaranteed Loan Corporation was established in 1979 as a
                   public, nonprofit corporation to guarantee loans made to eligible students by
                   eligible lenders as provided by the federal guaranteed student loan program
                   under the Higher Education Act of 1965, 20 U.S.C. 5 1001, et seq. See Educ.
                   Code §§ 57.ll, 57.41.

                          Higher Education Authorities are public corporations created by cities
                   as bodies politic and have express statutory power to “issue revenue bonds to
                   obtain funds to purchase student loan notes which are guaranteed under the
                   provisions of the Higher Education Act of 1965,” and, acting through a bank
                   with trust powers, to have student loan notes purchased for their accounts.
                   See
                   -    Educ. Code SS 53.ll, 53.13, 53.33, 53.34, 53.47.

                          The most serious difficulty lies in the fact that a person would be
                   serving as a director of both as the insurer and the insured. Persons who
                   serve on the boards of Higher Education Authorities investing in guaranteed
                   student loans are duty-bound to protect the interests of the authority and to
                   bring suit, if necessary, against the guarantors of defaulting students in
                   order to collect for the authority the amounts represented by the guaranteed
                   securities.   On the other hand, persons who serve on the board of the Texas
                   Guaranteed     Student Loan Corporation      are duty-bound to resist such
                   attempts where the asserted rights of the obligee authority against the
                   guarantor corporation are questionable.    -See Educ. Code §§ 53.01, et seq.;
                   57.01 et seq.




                                                  p.    541
Honorable Wilhelmina Delco     -   Page Two       (MW-170)



       Thus, we believe that membership on the board of a Higher Education Authority is
incompatible with membership on the board of the Texas Guaranteed Student Loan
Corporation, since persons who were directors of both would be subject to inconsistent
oublic resnonsibilities.  and would find it necessarv to sacrifice the interests of one in
order to serve the other. Thomas v. Abernathy County Line Independent School District,
290 S.W. 152 (Tex. Comm. 1927, j&mt. reversed).        See Ehlinger v. Clark, 8 S.W.2d 666
(Tex. 1928); Attorney General Opinion H-117 (1973); Attorney General Letter Advisory No.
114 (1975). -Cf. Attorney General Opinion MW-El(1979).

       However, it is not unlawful to appoint persons to the Texas Guaranteed Student Loan
Corporation board of directors who are already members of the boards of Higher
Education Authorities.    Persons who accept and qualify for offices that are incompatible
 with offices they already hold ipso facto relinquish their prior pcets. Thomas v. Abernathy
County Line Independent School District, supra.         See Rock Island Independent School
District No. 907 v. County Board of School Trusteesof Colorado County, 423 S.W.2d 665
‘(Tex. Civ. App., Houston [14th Dist.1 1968, writ rePd n.r.e.); Attorney General Opinion
H-155 (19731.

                                       SUMMARY

           It is not unlawful for a member of the board of     a Higher Education
           Authority to be appointed to the board of the        Texas Guaranteed
           Student Loan Corporation, but the two offices         are incompatible,
           and a person who accepts and qualifies for           the second office
           automat&U       forfeits the first.

                                               Very truly yours,



                                               MARK     WHITE
                                               Attorney General of Texas

JOHN W. FAINTER, JR.
First Assistant Attorney General

TED L. HARTLEY
Executive Assistant Attorney General

Prepared by Bruce Youngblood
Assistant Attorney General

APPROVED:
OPINION COMMITTEE

C. Robert Heath, Chairman




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Honorable Wilhelmina Delco   -   Page Three     (Mw-170)



Susan Garrison
Rick Gilpin
Eva Loutzenhiser
Bruce Youngblood




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