       %-HE    A      ORNEY




                        May 5, 1950

Hon. Theophilus 3. Painter,   President
The University  of Texas
Austin, Texas                   OpinionBo.     V-1052.
                                Re: The legality  of invest-~
                                    ing the Permanent Uni-
                                    versity Fund in bonds
                                    of common and independ-
                                    ent sohool districts
Dear Sir:                           of Texas.
            We quote from your inquiry    as follows:
             "The investments of the Permanent Uni-
      versity Fund are made pursuant to the author-
      ity delegated to the Board of Regents by
      Artiole 259la, Vernon's Annotated Civil gtat-
      utes of Texas, and by Section 11 of Article
      VII of the Constitutionof     Texas, as amended.
      We would appreciate    very much your opinion
      as to whether or not the term 'School Bonda
      of Munloipalitiesl    in the oonstitution  and
      statute8 inaludes the bonds of oommon and
      Independent school distriots    of this State?"
           The Constitution of this State by Section 11 of
Article VII, as amended, declares that the Permanent Uni-
versity Funds "shall be invested in bonds of the United
States,  the State of TexBs, or oounties of said State, or
in Sohool Bonds of munioipalities,  or in bonds of any city
of this State, or in bonds issued under and by virtue of
the Federal Farm Loan Aot . . an
          In oonformanoe with the oonstltutional     provi-
sion, es amended, Article   25918 of Vernon's Civil Stat-
utes was enacted.   Section  1 of that statute  provldea in
part:
           "The Board of Regents of the Univer-
      sity of Texas la authorieed to invest the
      Permanent Fund of the University of Texas
      inr
Ron, Theophilus      3. Painter,    page 2     (y-1052)


                    Bonds of the State OS Texas;
                    Bonds of the United States 5
                    Bonds of countiea of the State of
                    Texas; sohool bonds of munioipali-
                    ties of the State of Texas; bonds
                    of oities in the State of Texas;”
              Webster’s Rew International        Dictionary,   2nd Rdi-
tion,    defines “munioipality”   to be:
               “A town, oity or other distriat  having
        powers of local self-government;     a munioipal
        oorporation;   also, the oommunity under the
        jurisdiction   of a munioipal government. 0 .’
          In Love Y. City of Dallas, 120 Tex. 351, 40 S.W.
2d 20 (1931) our Supreme Court, speaking on the nature,
status and property rights of school dietriots OS Texas,
said :
                “Sohool distriots    are loo01 publlo oor-
        poretiona OS the aame general oharaoter as
        munioipal 00 orations.          Thom aaon Y. Rlmo Ind.
        So hool Dia t . “p TeX&iv.App.)     2 %9 S.W. 868,870;
        Royee Ind. Sohool Diat. Y. Reinherdt (Tex.Civ.
        App.) 159 S.W. 1010 (writ refused).            They are
        defined as quasi-munioipel         oo orations and
        :!;;a     their powera by deleget rp on born the
                a They are state sgenoie8, erected end
        emplwed for the purpose OS edminiatering            the
        state’s    system of pub110 sohoola. 24 Ruling
        Case Law, pp- 562 to 565, a# 6 and 7 . e .
        Cities and towns and munioipal oorporations
        are OS the aama general nature as queei-muni-
        oipal corporetiona,       in 80 far as here involv-
        ed, and the right of the Legislature           to oreate,
        abolish,    enlarge or restriot       them in their ter-
        ritory or powers la, unless restrained           by ape-
        cial constitutional       provisions,    similar to the
        authority of the Legislature          over quasi-muni-
        oipal corporations 0 Both are agenoies of the
        government - the one with a more limited sphere
        than the other . o .”
              And from Hatcher     Y. State,   125 Tex. 84, 81 S.W.
2d 499 (1935)      we quote:
              ”
                  o e Sohool Diatriota,   whether inde-
        pendeni   or oommon sohool distriota,   are not
_.   ‘.




          Hon. Theophilua    S. Painter,   page 3    (V-1052)


               primarily sgenaies of the state, but they
               are loo61 public corporations    of the same
               generzl character  as q unloipel corporations
               . . .




                      Furthermore, school distriots    of Texas, whether
          classified   as common or independent,    are by statute con-
          stituted   bodies politic end corporate.     Arts. 2748, 2780,
          V.C.S.; Hatcher Y. State, aupre.
                     The authorities    above quoted demonstrate that
          sohool districts    of this State are munlclpalities,    local
          public corporations,    oreated by the State for the purpose
          of conducting In their localities      the certain govertusen-
          tel educational   functions   delegated by the State.
                       In our opinion,     the phrase "sohool bonds of
          munlcipelltiesR    as used in Section 11 of Artiole VII of
          the Constitution      and Article   2591a should bs construed
          to include sohool bonds of common and independent school
          distriotsof    Texas.    Further, that the words "OS munioi-
          Palitiea"    were employed to restrict     the investment o?
          permanent University      Sunds (insofar   asschool bonds are
          conoerned) to investments in public school bonds as dis-
          tingulshed from bonds of private school corporations.
                     It is important to note that the same provl-
          sions in the Constitution      end etetute considered herein
          further authorize investment of such funds "in bonds OS
          any city of thin state."       The quoted phrase immedletely
          Sollows the language under oonsideretlon.           School bonds
          of municipally   controlled    sohool diatriots      are issued by
          the city.   such  bonds   are  city   obligations,    oity bonds.
          Poteet Y. Bridnea,    248   S.W.  415  (Tex.Civ.Agp.     1923); A.0.
          apinions v-334    V-690.     Being  city   bonds,  investment   of
          permanent Unlvksity      funds in same would olearly        ba e+
          thorlsed by the clause,      "bonds of any olty of this &ate."
                      IS it were the purpose of the Constitution   with
          nspatt   to investments In school bonda to rastrlat    in-
          vestments of said funds to Wore sohool bonds issued b;r
          munioipelly   oontrolled school districts, swh intendwent
                                                                  .-   ._


Ron. Theophilus     3. Painter,   page 4    (V-1052)


could and, we think, would have been aocompllshed simply
by omission from the law o? that phrase ‘school      bonds
of municipelities,”     and leaving ttarain only the phrase
“bonds of 8~ oity of thf;s State.        It Is oleer that “mu-
nioipellties     end “city,    as wad in the Constitution   end
statutes were intended to have dlfierent      meaninga from
om another.
            In construing  the Constitution     aid statutes,
as we have, to euthotise    investment o? permanent Uni-
versity   funds in oommon and independent sohool district
bonds, as well as in the muniolpelly       oontrolled   school
district   bonds, meaning Is given to the phrase “sohool
bonds of munioipallties   0” Construed otherwire that
phrase bw omes useless,    having no meaning.       Such a pn-
sumption should not be ascribed to the people who sdopt-
ed the amended oonstltutional     provision,    nor to the
Degisleture   in its enactment in sooordeuce therewith.


              Investments of the Permanent University
        Fund may be made in the bonds of common end
        Independent school distrlots   OS this Stats.
        Art. VII, Seo.11, Tex. Const.;   APt. 25918,
        Seo.1, V.C.S.
APPROVED
       :                                   Yours vary truly,
J, C. Davis, JP.                             PRICR DARIXL
County ASfairs Division                    Attorpy .Cenerel

Joe Qreenhill
FPrst Assistant
Prioe Daniel
Att orney Genepal
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