Gerald C. Mann




     Hon. T. F. Slack    Opinion Number O-5584
     County Attorney     Re: ~1s the recent Act of the Legisla-
     Reeves County       ture, which grants to the State Board
     Pecos, Texas        of Eduaation an option to purchase re-
                         funding bonds, issued to refund bonds
                         owned by the State Permanent School
                         Fund applicable to the refunding of
                         the Beeves County Courthouse and Jail
     Dear Sir:           Bonds in question?
               We are in receipt of your letter of recent date read-
     ing as follows:
                “On November 2.5,1942, Reeves County entered
          into a contractwith B. V. Christie & Company to
          refund $92,500. Reeves County Courthouse end Jail
          Bonds of an issue now.outstandingin the amount of
          $105 000, the remainder to be discharged out of
           vai able sinking funds. Under this contract, B.V,
          i!  i
           hristie  & Company was granted an option to pur-
          chase the refunding bonds, bearing interest at the
          rate of 3 l/2$ per annum, at par and accrued inter-
          est. B. V. Christie & Company has recently exer-
          cised the optiongranted by the contract to purchase
          these bonds.
               “Subsequentto the makin of this contract, the
          Legislature enacted Chapter 268, Acts of the 48th
          Legislature,RegularSession, which grants to the
          State Board of Education an option to purchase re-
          funding bonds issued to refund bonds owned by the
          State Permanent School Fund. The State Permanent
          School Fund now owns $93,000 in principal amount of
          the County’s Courthouse and Jail Bonds which have
          been called for redemption on September 30, 1943
          pursuant to the opinion of the Supreme Court in {he
          recent case of Co&ran County v. Mann.
               “I would appreciateyour valued opinion as to
          whether or not this recent Act of the Legislature
          is applicableto these particular bonds and whether
          or not it is necessary for the County Judge to com-
          ply with the terms of that statute in regard to
Hon. T. F. Slack, page #2


    notifying the Board of the terms under which the
    County has agreed to sell the refunding bonds to
    B. V. Christie & Company.
         "Article I, Section 16, of the Constitution of
    Texas, and Article I, Section 10 of the Constitu-
    tion of the United States forbid the enactment of
    laws impairing the obligat,
                              ions of contracts. These
    constitutionalprovisions apply to the contractsbe-
    tween States and individuals. The State of Indiana
    ~63",3,"'~~l~5fS~~rt;~~d~o~E1z~o:o~~)v*        They
    also Apply ti Contracts between political sub&vi-
    sions of States and individuals. Shauleigh v. Sag
    eteiQL 15: U.S. 646, 42 L.Ed. 310, Payne v. First
       I n 1 B nk, 291 S.W. 209 (Comm. App.).
          "In 9 Texas Jurisprudence $3, the nature of the
     protection of contracts against impairmentafforded
     by both Constitutionsis stated as follows:
          "'The constitutionalprovision is violatedwhen-
     ever there is any invasion of the effect of a con-
     tract "in however small a particula9';the contract
     need not be entirely or even materially impinged upon.
          ""'The utmost freedom to enter into any contract
     permitted by existing law is the inherent right of
     every citizen, and when he exercises that right in a
     lawful way, no Legislature has the power to disturb
     the purposes or effect, or in any manner rewrite any
     of the provisions of that contract, er make a new
     contract for him, and the right to comply with and
     enforce its provisionsas written is fixed and vested.
     The degree in which the offending statute may impair
     the obligationof contract is immaterial. The only
     question is, Has the obligationbeen encroachedupon
     in any respect?"'
          "Under its contractwith the County, B. V. Chris-
     tie & Company is given the right to purchase the re-
     funding bonds. This right is a creature of the con-
     tract. If the above mentioned Act of the Legislature
     grants a prior right to the State Board of Education,
     it seems clear that the rights of B. V. Christie &
     Company are thereby impaired. Since this is prohib-
     ited by both Constitutions,it is my opinion that this
     statute does not apply to the bonds covered by the
     preexisting contract.
Hon. T. F. Slack, page #3


          "The State Board of Education meets again on
     September 6th and I would greatly appreciateyour
     opinion on this question before that date if it is
     convenientlypossible. Please send a copy of your
     opinion to the State Board of Education."
          Replying to the above you are advised that under the
facts as stated, it is our opinion that the authoritiescited
by you sustain your position. Both the State and the United
States Constitutionsforbid the enactment of laws impairing
the obligation of contracts. It follows that if B. V. Chris-
tie & Company entered into a valid contractwith Reeves County
prior to the passage of Chapter 248 Acts of the Forty-eighth
Legislature,Regular Session, said Ehapter 248 is not applica-
ble to these bonds and it is not necessary for the County Judge
to comply with the terms of same in regard to notifying the
Board of Education of the terms under which the county has
agreed to sell the refunding bonds to B. V. Christie & Company,
but it is sufficientif it be made known to the Board that a
valid contract had been made prior to the passage of said Chap-
ter 248, giving to said Company the option to purchase the re-
funding bonds.
                                  Very truly yours
                                  ATTORNEY GENERAL OF TEXAS
                                  By /s/ C. F. Gibson
                                  C. F. Bigson, Assistant
APPROVED SEP 3, 1943
/s/ Gerald C. Mann
ATTORNEY GENERAL OF TEXAS
APPROVED:OPINION COMMITTEE
BY:      BWB, CHAIRMAN
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