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        Honorable Alwin E. Pape           Opinion No. W-243
        County Attorney
        Guadalupe County                 Re : Whether the CommissionersJ
        Seguin, Texas                         Court of Guadalupe County
                                              can sell government bonds
                                              belonging to the permanent
                                              school fund of said county
                                              at a discount and,rel,ated
        Dear Mr. Pape:                        questions,
                  Your request for an cpinion, dated June 28, 1957,
        propounds the following questions for our consideration:
                      “1 . Can the Commissioners’ Court of
                 Guadalupe County sei~lcertain government bonds
                 at a discount and other bonds belonging to the
                 Permanent School Furidof Guadalupe County and
                 immediately purchase fro:?a bank, as an inter-
                 related transaction, certain bonds of ,the
                 Navarro Rural High School District at a .iis-
                 count of a certain amount so t&t the Coucty
                 Permanent School F’undwill not be Ioh-;:-Ted?
                        “2. Does the purchase of rural high
                 school bonds by ti;ePO’L;nt<-FermanerltSchool
                 F’und~ come within khe pu.?viewof Article ‘824,
                       c 311
                 TI.”>*L?o
                         .
                  With respect to lands gran.tedthe various counties
        for educational purposes. Smntion 6, Article VII, of the Con-
        stitution, provides, fr.part, that:
                      “Said lands p and the proceeds thereof,
                 when solid,shall be held by said counti,esalone
                 as a trust for the benefit of public schools
                 therein; said proceeds to be invested in bonds
                 of the United States, the State of Texas, or
                 counties in said State, or in such other securi-
                 ties, and under such restrictions as may be
                 prescribed by law; and the counties shall be
                 responsible for all investments; the in-terest
                 thereon, and other revenue, except the principal
                 shall be available fund.”
                                                            --   .i.




Honorable Alwin E. Pape, page 2   (W-243)


          Article 2824 of the Revised Civil Statutes, authorizes
the investment of such proceeds in other bonds not theretofore
authorized. The additional authorization under this Article in-
cludes bonds of independent or common school districts.
          The Commissioners' Court holds money belonging to the
county permanent school fund in trust for public schools, arid
cannot abuse this discreti.on. Delta County v. Blackburn, 100
Tex. 51. 93 S.W. 419 (1906). The authority of the commission-
ers' court to sell investment securities held by the Permanent
School Fund of the county at a price eaual to or greater than
the amount paid for the same has been recognized, Attorney Gen-
eral's Opinion O-5944 (1944). Rowever, it was held by Attorney
General's Opinion v-1089 (1950) that the Commissioners' Court
could not cash Government bond school fund investments before
maturity and reinvest in independent school district bonds hav-
ing a lower interest rate. We quote from the foregoing opinion
as follows:
          "Under the facts submitted, the Commissioners'
     Court would sell United States Government bonds be-
     longing to the permanent school fund of the county
     at a discount, thereby diminishing the permanent
     school fund. It is our opinion that such a procedure
     would be in violation of Section 6 of Article'VII of
     the Constitution of Texas.
          "If, on the other hand the government bonds in
     question are sold at not less than par9 the Commis-
     sioners' Court would have authority under Article
     28.24to invest the proceeds in bonds of independent
     school districts," (Emphasis added).
          Attorney General's Opinion O-5944 (1944) recognized
the right of the Commissioners ' Court +o sell bonds at 85$ of
par value which were purchased at 629% of par value. But the
opinion only recognized the authority of the Court to sell
bonds belonging to the Permanent School Fund "at a price 'equal
to or greater than the amount paid for the same."
          Since the Constitution makes the Commissioners'Ccrurts
trustees of the Permanent School Fund of a county for the bene-
fit of public schools, it was held in Delta Countv v. Blackburn,
m,     that the Commissioners1 Court could not reduce the in-
terest rate on a note from seven percent to three percent.
          The proposed transaction contemplates a sale of gov-
ernment bonds belonging to the Permanent School Fund of Guada-
lupe County at a discount. It further contemplates, as a
Honorable Alwln E. Pape,   page 3     (W- 2431


second step in the over-all transaction the purchase of bonds
issued by the Navarro Rural High School'District. We do not
inquire into the ability of the Commissioners' Court to pur-
chase bonds at such a rate of discount as to compensate for the
loss incurred in the sale of the government bonds. Even though
the proposed sale and purchase be interrelated from the stand-
point of time, or otherwise, we think it clear and fnescapable
that one of the basic features of the proposal is tie saie of
government bonds belonging to the Permanent School Fund at a
discount. This the Commissioners' Court is not authorized to
do even though by subsequent investments, wisely Randprudently
made, it might be able to recoup the loss.
          Your first question is accordingly answered in the
negative. It is therefore unnecessary that xe answer the second
question.
                            SUMMARY
           The Commissioners9 Court of Guadalupe County
      cannot sell certain government, and other bonds,
      belonging to the Permanent School Fund of said
      county for less than the purchase price thereof,
      and immediately purchase, as an interrelated
      transaction, certain bonds of the Navarro Rural
      High School District at a discount.
                                    Yours very truly,
                                    WILL WILSON
                                    Attorney General of Texas



                                       Leonard Passmore
LP:pf:wb                               Assistant
APPROVED:
OPINION COMMITTEE
H. Grady Chandler, Chairman
C. K. Richards
Elbert Morrow
Howard Mays
REVIEWED FOR THE ATTORNEY GENERAL
BY:         Geo. P. Blackburn
