Untitled Texas Attorney General Opinion

Honorable Maurice P. Bullock county Attorney Peoos county F't.Stocktcn, Texts

Ik2.rSir: Opinion Number O-2667 Re: Validity of road bonds voted upon the condition that they he taken ever and assmcd for paymnt by the State,

:Vehave your letter in which cur opinion is requested on the folIow5r.gstate of facts:

"A oonsidernSle portion of the State highwys in Peoos county ore what are generally knom as un- inprwmd dirt roads, end the citizens of Feces County are desirous of having these State highways Improved and herd surfaced. A plan h&s been suggested to the x?mnty Comnissj~oners’ Court whereby an election mey be called for the purpose,of voting bor.dsto finance this proposed highway oCnShW&iCn and imprOVement without the county actually in the long run being burdezed x%th the necessity of levying tares for the pa>mnt of such bonds. It has been suggested that the orr?ersar.dnotices for such election night bo so drwm BS to condition their issuance upon the State Iiiglx%yDepartment's using the proceeds thereof for construction, improvement, etc. of roads in Pecos county 8s State highways, and conditioned further upon Eouse El1 688 of the 46th Legislature, Regulm Session, 1X5?, being hereafter amendod in such mnnner as to enthorize the fu13 aswmption by the Strrteof Texas of the psynx%t of all bonds thus issued."

Your q~uestionis:

"Kill a bond j~ssuethus voted and thus limi.ted be valid, and would bonds thus voted hut issued in violation of said conditions he null and void?"

Although your staterrontof facts conton;p!atesthe prepere- tion and passcge of orders and the issuance of not!ce for an election to vote road bonds conditionally, it does not disclose in ooncrete form the proposition proposed to be submitted to the oaalified voters

-Honorable Maurice R. Bullook, page 2 O-2667

for their'action thereon. Under the law there is no inherent right in the people to hold eleotions. Sea ~~llliamsvs. Glove=, 259 S. W. 957. Eleotions may be held only where authorized by law. In tho voting of road bonds we must look to Article 752a, et seq., Title 22, Chaper 3, of Vernon's Annotated Civil Statutes, for the specific au- thorityto vote and issue them. It will be noted that Article 762b provides that the election order and notioe of election shall state, first, the purpose for which the bonds are to be issued: seoond, the amount thereof; third, the rate of interest; and, fourth, that ad valorem taxes are to be levied annually on all taxable property within said issuing subdivision to pay the annual interest and provide a sinking fund to pay the bonds at maturity. Subsequent articles detail the steps that must be taken preparatory to voting at this election, and, likewise, prescribes the manner of holding same. Other articles under this title prescribe the maturity dates, interest rate and de- nQnination to which bonds issued thereunder must conform.

We call your attention to the following language appear- ing in Artiole 762b:

"Upon the petition of fifty resident property taxpaying voters of any county, the Conrmissionersl Court of suoh county. at any regular or special session thereof, shall order an election to be held in suah oountv to determine whether or not the bonda of suah county shall be issued -- for the purpose -- of the oonstruo- & operation of macadamieed , $ravei;ed -ore roads and turnpikes, --- -- or% aid thereof * * *

In our opinion the underscored language in the above ar- ticle establishes what may be considered the statutory purpose for whioh road bonds may be issued'and that the use of such language tends to exclude other purposes, even though related. In other words, the underscored portion of the above quoted statute appears to be the pur- pose that the Legislature intended having submitted to the property taxpaying voters of any county whenever the proposition for the issuance of road bonds is subnitted to them for their action thereon.

For purposes of this opinion we must assume that it is your intention to subnit a proposition to the voters of your county containing a purpose phrased at set forth in Article 752b, hereinabove underscored, and in addition thereto it is planned that the orders and notices, as well as the petition, shall provide that in the event the bonds are authorized the proceeds thereof shall be used only for the oonetruation and improvement of State highways within the county and then only in the event that House Bill 666, Forty-sixth Legislature, Regular Session, 1939, is so amended as to make such bonds 10% eligible for partiaipation in the State gasoline tax fund allocated to the Board of County and District Road Indebtedness. Re feel it necessary to restate your proposition in order that our answer shall

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Honorable Maurice R. Bullock, page~3 O-2667

be deer. This question differs from the problem presented in the Moore VS. Coffman case, 200 S. A. 374, wherein the general rule is stated that the purposes for issuing bonds stated in the petition, order and notice of the election determines for what purposes the bonds were,issued, and that the voters have no right to rely upon any other state@nt or order for ascertaining the purposes for which bonds are to be issued. In the instant matter theconditions are made a part of the petition, ordar and,notice,.,and,therefore, become without question a part of the election proceedings, and ,inview of the language used by the Supreme Court in.the above,.mentionedMoore vs. ?Xffman ease, we think,that a c;on<itionmight properly.be inserted in the preelection orders. We quote the following frorathe opinion in that case: ,,

"That any Commissioners' Court in Texas is within its legal rights in annexing a condition in its preelection orders which fixes the exact purpose for which the bond money constituting the proceeds of a bond.issue sul-mittedto a vote is to~be used."

In view of the foregoing quotation we think it would not be unlawful to annex the further oondition that the,bonds should not issue except upon the happening of some named event. The result thus obtained would have the effect and foroe of a contract. See,Black vs. Strength, 246 S. W. 75; 19 RCL, pages 1163 and 11641 Roane County Court ~6. O'Brien, 122 S. E. 352 and 355; also Fletcher vs. Ely, 53 S. W. (2d) 817 (Writ Refused)4 We, therefore, conclude that if the bonds are voted for the straight statutory purpose, that isa "for the con- struction, maintenance and operation of maoadamizad, graveled or paved roads and turnpikes, or in aid thereof," that the proceeds be used for the construction of State designated highways, and that the issuance thereof'is conditioned upon House Bill 688 being mended in a manner so as to permit the participation of such bonds to the extent of 10% in the,Stete gasolj~netax fund allocated to the Board of County and Cistriot Road Indebtedness, that suoh bonds would not be rendered ipso facto void because of the inclusion of suoh namedcondition in the proceedings. We conclude further that without the happening of the last stated contingency the bonds could not be lawfully issued.

It seems clear from your letter and statement of facts that the prinoipal thought underlying thiS suggested method of voting and issaing road bonds is that House Bill 688 shall be amended in such manner as to permit the "full assumption" by the State of the payment of all bonds thus issued. If this were not possible it is reasonable to assume that the property taxpaying voters of your county would perhaps react unfavorably to the authorization of further debt for road construction within,the oouxty. We think it advisable to call your attention to the following language appearing in the present "Road Bond Law!',commonly knoTI es T1ouseBill 688, Section 8 thereof read- ing, in part, as fOllOWs:

- -Honorable Maurice R. Bullook, pge 4 O-2667

"No provision of this Aet shell be construed . . . . to pledge the credit of the State in any mannar whateverfor the payment of any of the out- standing road indebtedness herein referred to of the county or districts of the State. It is hereby declared that all eligible indebtedness, es hereindefined, shall remain indebtedness of the rsspeotive county or defined road district nhioh issued it, and said counties or de- fined road districts shall remain liable on said indsbted- ness aacording to its term8 and tenor3 and it is not the purpose or intention of this Act or any prt hetoof to obligate the State of Texas direotly or indirectly or contingently for the payment of any suoh ObligatiOns, or that the State of Texas should assume the payment of said obligations, and this Act is not to be construed es obligating the State of Texas to the holders of any of said obligations to make any payment of the same of any pert thereofl nor shall such holders have any right to enforce the appropriation of any of the moneys here- inabove provided for; nor shell any provision hereof constitute a oontraot on'the part of the State to make money available to any oounty'for the oonstruotion of edditional lateral roads, but the provisions hereof are intended solely to compensate, repay and reimburse such oounties and diatricta for the aid end assiatenoe given to the State in furnishing, advancing and aontributing money for building end conatruoting State highways end lateral roads * * *".

It till be seen that Rouse Bill 688, end its predecessors, have been and are nothing more then appropriation bills. Biennially the Legislature appropriates one-fourth of the gasoline tax to the credit of the County and Road Distriat Highwey Fund to be used for the purposes speoifioally set forth in the Aot. Se&ion 6, subsection (j).of House Bill 688, oonstitutes the appropriation clause of the dot. The constitutionelity of this Aot would ba seriously questioned if the terms thereof should contemplate a pledging or en appropriation of one-fourthof the gasoline tax to the purposes defined in the Act for a period of longer than two years. Seotion 6, Artiole 8 of the Con- stitution, reads, in pert, as follows:

"No money shall be drawn from the treasury but in pursuance of specific appropriation made by law; nor shall any appropriation of money be made for a longer term than two years * * *'.

It seems olear that any amendment to the present Road Bond Law which would contemplate the "full assumption" by ,the Stats of the payment of all bonds issued in aooordanoe with the suggested plan would be unconstitutional and at once the condition sought tobe imposed by the voters of your county loses muoh of its force. Under the terms

O-2667

of '~!o:isc ?'?I.688 the road bonds of the various counties upldor~ert~:i condition5 become eligible for participation in the funds sccruir,rStllT the Board of County and i&strict Road Indebtedness, and so long as such funds accn.~etothe Eoard through the collection of gasoline ta~nx and the subsequent appropriation by the Legislature, the principal a::o interest of bonds made eligible for participation can be legally paid by the Powd to the extent the funds on hand available for that purpose will apply. 'Tiequote the following significant language from sub- soctior:!g) of Seotio-.6 of House aill 686:

"in the event the amount so estimated to be applied to the payment of eligible obligations for any coun%y or defined road distrjct is sufficient to meet aS1 maturjng interest, principal and sinking fund requirements, the Commissioners %ourt may dis- pense with the collection of ad valorem levies for such calendar year for such interest, pr,inoipal.or sinking fund requirements. In the event the amount of payment so estimated to be applied is not suf- fi~cientto meet the maturing interest, principal and sinkjng find requirements, the County Commissioners' Court shall collect from taxes cn the property in said respective counties and defined road districts an amount of money equal to the difference between tile*mount of such requirement and .theamount avail- able for application."

Ihis subsection further provides t2la.t in the event the r.- of finds available for application to meet ,thematuring r;,o!zt interest., prj,ncipelaud sirking fund roqu.irement8 in eny yecr is aot sufflcien*. to sa,tisfysuch requirement, then the funds shall he prorated I~:: tl-r ma:inerpresorj~bedtherein. In other words, this and foregoing quo'tl- tions, p?sinly and forcefully operate against the "full assumptior" sy the State of any bonds.

It is entirely possible that House Bill 686 mi&t be so amended by the next session of the &gislature as to permi.tof a fuZI participation 1::: bonds of the type sought to be voted in your county, tn:t there can he no guarantee that succeeding legislature will re- ennct laws and make sufficient appropriations to provide for the f'lil' ~ayxer!?; of such bonds prjor to maturity thereof; and as can be seen from the above quoted portion of the existing Act, any time in the future that there may be an insufficiency in the fund to meet the maturitrg principal and interest in any year, it immediately becomes the duty of the Commissioners' Court of the county to levy a tax in such wn amount as will provide the additior.alsum necessary to promptly pay the maturing interest and principal when due. In other words, the oUig&tion, of necessity, must remain the primary obligation of the county voting the same, and the property of the taxpayers of said cou,~tyremains liable to taxation in such proportion RS is r,eoesscry to make up the insufficiency of the gasoline tax fund. it is spparem.

ibnoruble Maurj~ceH. Bullock, prlgo6 O-2667

that thsrc cm be no legal 'assumption" of tho bonds. 'IYebonds b~cme eligible for participation it?the fund and to the extent funds W-A a- Tai.leb1.e to meet that perticipatiol:each bend stands on a par3ty with a?1 other bonds made eligible for participation.

:n view of the foregoj.ngwe reach tho ccmalusion the,t. a road bond election would be rendered wholly ineffective if the ultimate issuance of such bonds WRS oondi~tionedupor 6,"full assumption" of the payment thereof by the Sixte. iImwer, this would not be true if the arwoxed condition contemplntes end prcwidos nnl,yfor the issuanno of such bonds upor!a change being mada in the prest:.nt law permitting them to partic?pate to the extent of'lOO$ i:?the @soLine tsx funds allocated to the Roard of County and C5strir.tRoad Indebtedness, 6 "fu',.l Issumpticr:" could moan nothi~ngless than an absolute ivl'.ease of the county from any liability cr obli~gatiopto pay such bonds, and this, se believe, could not be done under the present Constitution.

Te concede tha~t. .tteirmnedixte?yforegoing discussion is no,tnecessary to a proper dotarrniflrttlcn of the qxestiorrpropow~dsd in your letter, but in view of the widespread mFainterpretation as to ,the extent of the obligation of tho State uider the ,tenr.s of Eouse Eil:L 688, we +&irk it necessary to give you ,thebwofit of cur views as to the ultimate effectiveness of the present law and as to the likelihood of a subsequent Act bsi~ngpassed mak5r.gpossible a more bir.ding "assurrpticn".

Trusting that the foregoing satisfactorily a~~swersyour inquiry, we are

'T&ysL Clarence 5. Crow3 Clarence i. Crcwe Assis.tant