     ..    .




                       E ATTORNEY                GENERAL
                               QP      TEXAS
                              AUwrIN     11. TEXAS
PRICE  DANIEL
ATTORNEYGENERAL
                                       April,lg, 1947

  Ron. HouierD. Eck                    Oplnlon No. V-157
  County Auditor'
  Fayette County                       Re:   Disposltlon of road dls-
  La Grange, Texas                           trict,sinklng funds.

  Dear Sir:
           We have received your letter of March 22, 1947;
  in which you state that several road dlstricts~in Fayette
  County have been created and have issued bonds, and that
  subsequent thereto all of said obligations have been as-
  sumed by the State under the Road Bond AssumptlotlAct
  (Article 6674q, Vernon's Civil Statutes). You state that
  these district&now have balances in their respective
  slnkMg funds, and in connection therewith you request
  the opinion of this depattment upon the following questions:
               "1 . May the Commissioners Court spend this
                    money for the purpose of acquiring :
                    right of way?
               "2 "   If your answer is In the affirmative,
                      may they pay for same directly from
                      Sinking Funds and give proper account-
                      ing therefor?
               "3 . If question 1 is negatively answered,
                    then may the Commissioners Court use
                    such balances to fulfill Intent which
                    district was created. If so, must
                    warrants issued in payment for services
                    and supplfes be paid directly from
                    Sinking Fund accounts or must balances
                    be transferred back to Construction
                    Fund?"
           The road districts were created and the bonds were
  issued under the authority of Sectibn 52 of Article XII,
  Constitution of Texas, and Articles 752a, et seq., Vernon's
  Civil Statutes. Said constitutional and statutory pro-
  visions authoriie the issuance of bonds by road districts
  for the purpose of "the construction, maintenance, and
  operatlon of,macadamixedb graveled br paved roads and turn-
  pikes, OF fn aid thereof and the levying of a tax In pay-
  ment thereof.
                                   .    ~..




Hon. Homer D. Eck, p&e   ,2,V-157"~:.;,:
                                      '.:,~


         It is settled law that money8 ,ina sinking fund       "
may be ,daedfor ,no'otherpurpose thaiithe one for which                         ,"
it was created. 30Tex. Jur, 457.
         Article 752k provides that ‘uponthe i.ssua~nce,of
bonds the commlssioners':court shall levy an.ad valorem      j'
tax suff~icientto pay the bonds at mat&irlty. Article
752n provides that the tax,collector shall collect said
taxes and'pag them to theecounty treasurer. Article 7520
provides that the county treasurer is the custodian of
such funds o <that he shall deposit them with the county de-
pository in the same manner as county.fUnds are deposited,
andthat he'shall promp,tlypay the interest and principal
as it becomes due outof such founds.
         ,Artlole 839 of,Vertionk CivFl Statutes prov1de.s
that the~'countytreas,urershall not honor or pay any
draft upon the interest.aiuislnklng ~.fundexcept for the
purpose of paying the intereston such bonds,~or redeeming '.~          .,::
                                                                    '~%~
the same,,OP for investme,ntin ,securitlesas ~providedby
law.                                        '~.      .~

         'It Is clear, therefore, under the for,egolng
statutes 'thatthe moneys in a sinking fund ~may:beused
only for the purpose of ~paJlng the interest,on and prin-
cipal of the ,bonds~for which. the sinking fund was created,
or for inve,stmentin securities as provided by law.
         ,You state that the,,bonds~ofthe various road,dLs-
tricts ,haveall'been assumed~by the State under the Road
Bond Assumptfon,Act. ,Therefore, we will have to determine
whether this fact changes the princlple,of law announced
above., Section 8 of sa'idAct (Article 6674s:8,)provides,               .
in part as follows:      ;,
                                                                   9..
         t, .,o 0 r It'ls hereby,declared that,all
    eligible indebtednes's;'as'herein defined, shall               Gl
    remain indebtednessof the,respective'cbuntles
    or deffned road d~stricta,Vh~ichissued It9 and
    said countf,es.ordefined road ,dfstricts shall
    remain liable on's'aid~,indebtednessaccordlngto
    Its terms and tenor;'and l.tis not tbe,purpose
    or intention of this Act; or any partthbreof,
    to,obligate the State,o,fTexas, directly.or in-
    dlrectlg,or contingently, for the papment.of any
    such obllgations,or that the State o.fTex,as
    should assume the ~paynientof sa~ld~obllgatlons,
    Andythfs Act is not tombe construed,,asobligating
  :~the State of Texas to,,the,holders ~of any,.ofsaid
    obligations to make any P.&sent ofthe same, OP

                                                                            c

                                       ‘-*
                                                                    .       *
Hon. Homer D, Edk, 'page 3, V-157


     any part thereof, nor shall such holders have
     any rights to,enforce ,theappropriation of.any of
     the moneys ,hereinaboveprovided for, nor shall
     any provision hereof const1tute.a contract on
     the.part of the State to make money available
     to any county for the construction of additional
     lateral roads ,. : . .I'
         Moreover, the 'recent~constitutional amendment
(Article ,vIII, Sec. 7-a), which provldes.for funds to
carry out the ,termsof the Act, provides in part as follows:
          "Subject 'Q legislative appronriation, al-
     locatlon e    direction, all net revenues . . . .
     shall be used for the sole purpose'of rlghts-of-
     way, constructlng;,aLalntainfng, ,and polic,ingsuch
     public roadways, end for,tbe administration of
     such law,s as may be prescribed by the Legislature
     pertaining to the supervision of traffic and
     safety on such roads; and for the pawent of the
     principal e,interest    on county and road dGt=t
     bonds OP

     and Road District HIghwaY fund utxler exlsti
     -v
     *;    provided; however, t'th             (1
     such net revenues e .O O e Nothinn contained here-
     & shall & construed=      authorizing the pledging
     of the State's credit for 9    purnose?
     mzsis     added)~-
         We see that the debt remains tha~tof the county
OP road dfstrict. It is also evident that the funds to,
carry out the terms of the Road Bond Assumptlon Act must
be appropria,tedevery two years before such funds will be
avaflable. It is eoncelvable thatthe    Legislature may
fail to make an approprfation or that the appropriated funds
may not be sufficient to meet all commitments. It is our
oplnlon that neither the constitutlonal amendment nor the
act Itself changes the principle announced above relative
to sfnklng funds.
         Your attention Is directed to an Act of the Forty-
eighth Legislature (Ch. 116, pO 198) which amended Article
752a to include the followfng provislon:
         (I
          ame.o* Provided when~the principal and all
    interest on said bonds are~fully paid, in the
    event there is any surplus remafnlng in the sink-
    ing fund, said remaining surplus not used in the
                                                \


Hon. Homer D. Eck, page 4, V%15$


    full 'paymentof~the principal and interest on'said
    bond orbonds,,may be used by the county, polL.tihal
    subdivision of the county, or any local district
   .that has ,been or may hereafter be created by any
    general .o~r
               special law for the purpose of the con-
    structi,on,maintenance, and operati.onof macadam-
    ized, graveled or paved roads and turnpikes or in
    the aid thereof as may:be determined by the Corn-     :
    missioners C~ourtof any county or the officials of
    any political subdivision of a county or any said
    road &istrPct."
         We answer your first question in the negative,    "
which renders unnecessary an answer to your seCond ques-
tlon. We answer your third quest?.onby saying that the,~
surplusmoneys in the respectrve sinking funds can be used
for no purpose othersthan the payment of Interest on and
principal of the obligations for which the funds were
created,f or for investment In securities as provLded by law.
However, when all principal of and interest on the bonds
are fully paid, th~ensurplus moneys in the slnklng~fund may
be used for the purposes authorized by.Article 752a, as
amended, and It Is our opinion that in this instance the
statute would authorize drawing the warrants directly a-
gainst the sinkIngfun&.
                                                                .   .

                           SUMMARY
          Surplus moneys in a sinking fund of a road
    district may not be used to purchase rights-of,-
    way, even though the bonds for which the fund
    was created have been totallgassumed by the
    State under the Road Bond Assumption A:ct. The
    moneys in such sinking fund may be used only to
    pay the principal ofand interest on the obliga-
    t ions for which the fund was created, or for
    investment In securities as provided by law. How-
    ever, if a surplus remains in a sinking fund after
    all principal of and interest on the bonds for
    which the fund was created have been fully paid,
    then said surplus may be disposed of in accordance
    with the provisi'onsof Article 752a, Vernon's Civil
    Statutes, as amended.




                      ,:
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Hon. Homer D. Eck, page 5, V-157


                               Velag tpu1g   gouIY3,

                          ATTORNEY GFZJ'ERAL
                                           OF TEXAS


                               By s/George W. Sparks
                                    George W. S@arks.
                                           Assistant

GWS :s:mrj:wc

APPROVED APR. 23, 1947
 s/Price Danfel
ATTORNEYGENERAL
