            TEE   A'LTORNJYGENE~RAL
                      OFTEXAS




Honorable 0. P. Lockhart, Chairman
Board of Insurance Commissioners
Austin, Texas
Dear Sir:                Opinion No. O-4373     '.~
                         Re: May a stock casualty company Sn-
                              corporated and licensed in Texas
                              under Ch. 18, Title '78,'invest
                              its surplus funds in bonds -issued
                              by a road district of a Texas
                              county under the provisions of
                              Article 4706, Subsection (c)?
       Your letter requesting the opinion of this department
on the above stated question reads as follows:
      "Please advisewhether a stock casualty
   company, Incorporated and licensed in Texas
   under Chapter 18, Title 78 .mag, under the pro-
   visions of Article 4706 subsection (c) Invest
   its surplus funds'in bonds lssuea by a road
   district of a Texas County.
      "We are of'~theopinion that the question
   should be ansvered In-the negative. -The'com-'
   pany involved argues to the contrary; however,
   upon the contention that road districts are por-
   tlons of counties, and that, therefore, road
   district bonds should be construed to be county
   bonds and as such eligible for investment. We
   have stated our views that the test of eligl-.
   blllty is not that of territorial coincidence,
   but one of Identity vel non of legal entitles.
   It seems to us that a road district is a total-
   ly different legal entity from that of a county
   or countles in which the road district's terri-
   tory may lie, and hence in no proper sense is
   a road district bona a county bond within the
   meaning of the statute cited. Please advise
   if we are correct in this view."
       Article 4706, Vernon's Annotated Civil Statutes, pro-
vides in part:
Honorable 0. P. Lockhart, page 2        O-4373


      "No company, except any-.writingLife,
   Health, and Accident Insurance, organized
   under the provlslons of this Chapter shall
   invest its funds over and above its paid-up
   capital stock In any other manner than as
   follows:

        . . . .
       "(c) In bonds or other Interest-bearing
    evidence of indebtedness of any county, In-
    corporated city, town, or school or sanitary
    or navigation district, such navigation dis-
    trict to contain a population of not les.sthan
    three hundred and fifty-nine thousand (359,000)
    according to the last preceding Federal Census,
    in this or any other State in which said com-
    pany may be duly licensed to conduct an lnsur-
    ante business, if such evidences of indebted-
    ness are issued by authority of law and if
    interest upon them has never been defaulted.


       Article 752a, Vernon's Annotated Civil Statutes, author-
izes any county or any political subdivision of a county, or
any road district that has been or may hereafter be created by
any general or special law to Issue bonds forthe purpose of
construction, maintenance and operation of macadamlzed, gravel
or paved roads and turnpikes, or Ln aFa thereof, in any amount
not to exceed one-fourth of the assessed valuation of the real
property of such county or political subdivision or road dis'
trlct, and to levy and collect ad valorem taxes to pay the In-
terest on such bonds'and provide a sinking fund for the redemp-
tion thereof. Said statute specifically provides that:
       11
        . . . . The term 'political subdivision'
    as used in this Act, shall be construed to mean
    any commlssloners~precinct or any justice pre-
    cinct of a count%, now or hereafter to be created
    and established.
       Article 778a, Vernon's Annotated Civil Statutes,-author-
izes any number of adjoining counties within this State, par-
suant to authority conferred to Section 52 of Article 3 of the
Constitution, to issue bonds not exceeding one-fourth of the
assessed valuation of the real property of the territory ln-
eluded within such counties, and to levy and collect annually
ad valorem taxes to pay the interest upon such bonds and to
provide a sinking fund for the redemption thereof, for the same
Honorable   0. P. Lockhart, page 3        o-4373


purposes mentioned in Article 752a,~'supra.-When such b'onds
are issued'by virtue of Article 752a, supra, when issued for
and on the faith and credit of political subdivisions or
road district, such taxes shall be assessed and collected in
the same manner as is now provided by law for the assessment
and-collection of common school district taxes. (Article
752m, Vernon 9 Annotated Civil Statutes)

       With reference to classification of county bonds,'
Article 752s, Vernon's Annotated Civil Statutes, provides:
       "When the road bonds have been Issued by "
    a county as a whole, such bonds shall be known
    and designated as I           County Road Bonds',
    taking the name of the county issuing the same,
    and shall express on their face that they are
    issued,under authority of Sectlon52, of Artl-
    de 3, of the Constitution of Texas, and laws
    enacted pursuant thereto."
       With reference to classification of subdivision bonds,
Article 75213provides:
      "If the proposition to issue the road bonds
   of a political subdivision or road district is
   adopted, such bonds shall express on their'face:
   The State of Texas, the'name of the ctinty, the
   number or corporate name of,the subdivision or
   district issuing such bonds, and they shall be
   designated as 'Road Bonds', and express on their
   face that they are issued under authority of
   Section 52, of Article 3, of the Constitution
   of Texas, and laws enacted pursuant thereto."
       In view of the foregoing statutes with reference to ~~.
classificatlon.of bonds, the procedure to be followed in ls-
suing the same, etc., it is clear to us ~thata road district
is a totally different legal entity from that of a c'ountyor
counties in which the road district'sterritory may lie and'~
hence in no proper sense is a road.distr'ictbond a county bond
within the meaning of Article 4706, supra. Therefore, we
respectfuIly answer the above stated question in the negative.
       It will be noted that the Legislature, in subsection
(c) of Article 4706, supra, specifically designated school or
sanitary or navigation district but did not name or mention
road districts. We believe that it was the intention of the
Legislature to-exclude road district bonds from subsection (c)
of Article 4706, and did exclude such bonds by not naming them
therein.
Honorable 0. P. Lockhart, page 4              o-4373

                                     .
  .
       Artlcle‘779;Vernon's Annotated Civil Statutes; as
amended Acts.1941, 47th Leg;, p. 899, ch,.552;sec: 1, the
Commissioners4 Court'may invest sinking funds accumulated for
the redemption and payment of any bonds issued by such county,
political subaivlslon, road district or defined district there-
of, in bonds of the United States, of Texas, or of any county
in this State, or any school district or road district of
this State, or any incorporated city or townof this State;
or in bonds oPthe Federal'Farm Loan Bank System, or'in War
Savings Certificates, and certificates of indebtedness lssu-
ed by the Secretary of the Treasurer of the United States.
No such bonds shall be purchased which, according to their
terms, mature at a date subsequent to the'time of maturity
of the bonds for the payment of which such sinking fund was
created.
       To us, the above mentioned statute illustrates that
the Legislature does not consider road district bonds as county
bonds, in the sense that county bonds are ordinarily under-
stood and treated by law. But, road district bonds and county
bonds generally are considered and treated as two distinct and
separate types of bonds.
                                         Yours very truly
                                   ATTORNEYGENERAL     OF TEXAS
                                                          _.
                                         By s/Arde11.Williiiims
                                              Ardell~~Williams
                                              Assistant

AW:GO:wc

APPROVED FES 5, 1942
s/Grover Sellers
FIRST ASSISTANT
ATTORREYGRWRRAL
Approved Opinion Committee By s/MS       Chairman
