HonorableTom C. King
State Auditor
Austin,     Texas

Bear Sir:                               opinionNo. O-1480
                                        Re: Validityof old age assistance
                                            warrantsheld by investors.

We are pleasedto complywith your requestfor OUT opinionon the
followingquestionsubmittedby your letter of September22nd:

          "If a financialinstitutionor investorshould buy $15O,OOO.OC
          old age assistancewarrantsfrom receipientsof old age as-
          sistance.or the holdersof such warrants,and heI. them in
          his/itsportfolio,would such holding in any manner affect the
          legalityof the instrumantaas an obligationof the state
          prior to the runningof the statuteof limitationon state
          warrants?"

As you point out in your letter,Article 4371,Revised Civil Statutes
of Texas, 195, as amended,Acts 1931,k2nd Legislature,p. 396,
Chapter242, 8 1, provides:

          *The Treasurershall contersignand pay all warrants drawn
          by the Comutrolleron the Treasurywhich are authorizedby
          Law.  No money shall be paid out of the Treasuryexcept a
          the warrantsof the Comptroller,and no warrant shall be
          paid by the Treasurerunlesspresentedfor paymentwithin
          two year5 from the close of the fiscal year in which such
          warrantwas issued,but claims for the paymentof such
          warrantsmay be presentedto the Legislaturefor appropri-
          ations to be made from which such claims may be paid."

Old age assistancewarrantsissuedagainst the "StateDepartmentof Public
WelfarePund" under authorityof SenateBill No. 36, Acts 1939,46th
Legislature,are unquestionably valid obligation5of the State payableout
of said fund. Such warrantsare transferable,thoughnot negotiable.
Their validitycannotbe in anyway affectedby the fact that they may be
transferredto investorsand held by them so long as they are presentedto
the State Treasurerfor payment"withintwo year5 from the close of the
fiscal year" in which such warrantsare issued. Nor is suoh warrant
holder'ssecurityof payment impairedfor failureto presentsuch
warrantspromptlyto the Treasurerfor payment. Article 4386,Revised
Civil Statutes,control5the paymentof thesewarrantsand providesthat:
Hon. Tom C. King, Page #2 O-1480


     ,I
     . . . in the event of a questionand necessityarisingas
    to the priorityof paymentof any such warrants,they shall
    be paid in order of their serialnumber . . .II

In accordancewith this Articlethe Treasureris requiredto maintain
in any fund out of which outstandingwarrantsare payable,sufficient
money to pay such outstandingwarrantsat all times, before he may pay
other warrantsbearinga subsequentserialnumber. See Williamson
vs. FranklinCounty,94 S. W. (2d) 1190.

                                    Yours   very truly

                               A!LTORNEY
                                       GENERALOF TEXAS

                               51 Walter R. Koch



                               BY
                                    Walter R. Koch
                                        Assistant

WPiK:N/ldw

APROVFaDSEP. 25, 1939
s/W. F. Moore
FIRST ASSISTANT
ATTORXEY-L

APPROVED
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