Untitled Texas Attorney General Opinion

OFFICE OF THE A7TORNEY GENERAL OF TEXAS AUSTIN

Honorabilk. Ben J, Dean Dietriot Atbarney ~Breokenrld~, Texas

Dear Slrr Opinion Number Ret Eligibillt bonds af Stepb

We are inreoelpt c+f Deoember 15, in vihloh you requssb our opi setloM, whtdl are -

ndnmnt thereof? to oredit for them bond6

sots underlying your questions are as

of whloh bo roads whloh are,&ow and have been for many year8 eonatltuting a part of the Sttite 8igbway System of Texas, end as suuoh have been maintained by the State of Texas as a part of its de&g- nated Stats Highway System, Them bonds were on and after

Honorable Ben J, Dean, page #2

JanuarJr 1, 1933, eligible to partioipate under the provisions of Chapter 13, pa e 15, Aote of the Third Called Seeslon of the Forty-second f!eglslature, as emended, On February 25, 1924, prior to the enaotment of the above mentioned law, Ste hens County, from *he interest and sinking rti6 of Series S bonds on hand, purchaeed three Series A Road Bonds, Number6 491, 492 and 493, which bonds were not due and payable until February 15, 1942. No order of the Commlselonera' Court of Stephens County has ever been made or entered oanoelling said 'three road bonds. The Board of County and District Road Indebtedness has refused to give Stephens County oredit for the above three named bonds or any pe.rt thereof, basing their refusal on the opinion of the Attorney Generalts office of date January 18, 1937. We have reooneldetid the opinion of the Attorney General~e Depart- meQt, dated January 18, 1937, addressed to Mr. W. H. Gordon, Cairf Aooountant, Board of County and Dlstrlot Road Indebted- nom, Austin, Texas written by the Honorable Viotor W, Bouldln, Assistant Attorney beneral, and have oonoluded to agizee with the pr inoiple announoed thetieln . 006 think it immaterial that your bonds are serial bonds, as diatlnguished from the term bonds Tudor oonsideration in that opinionJ llk&wise , we think the optional feature oontalned in said bonds has ~no bearing on the proper answer to this question; We are oonstralned to adopt the oonolusions reaohed in that opinion irrespeotive of it8 failure to alte authorities. As a matter of law we oonolude that the three bonds purdhassd with Series A sinking fund money were paid off and dlsoharged and no longer existed on Jenuary 1, 1933. The question as to whether or not the bonds so purohased have been dleoharged ap- pears to us to be aoademla. Said bonds were bought with funds acoumulated for that very purpose and when said money &is been used to purchase said bonds, HO think the interests have merged, In the aaee of Smith vs. Cooley, 184 S.+ W. 1050, the court said1 YChe p4~~44~i0n by the maker of annate is prima facie evldsnae that said note has been paid;"

Ronorable Ben J. Dean, page #3

This pronounoement by the oourt was in line with earl1 er authorlt 10s. see oase of R&eland vs. Miles, 24 8. W. 1113 and Stephens VS. Yoodle, 30 9. W. 490. Further, in the oase of Close vs. Steel, 2 Tex. Rep. 237 and 13 Tex. Rep. 625, the court said: Vh4 delivery of a note by the owner to the maker, with intent to discharge the debt, dle- ohargee the debt.* Artiole 5939, Revised Civil Statutes of 1925, pro- vides that a negotiable instrument is discharged Yvhen the prinolpal debtor beoomes the holder of the instrument at or after maturity fin his own right.” We ,think there can be no argument but that the instrument itself, wbioh merely evi- dences the obligation, beoomes ineffectual under suoh oir- ownstanoee. Suoh, we believe, is the meaning of this statute. However, if .the prin~oipal debtor should oome into possession of the instrument at or after maturity throuep fraud, we do not think this statute oould effeotively dlaaharge the obligation whioh said instrument evidenoed. Judging from the statement of faots set forth in your letter we oonolude that there was no fraud praotloed by the oounty in obtaining these bonds, but rather, on the other.hand, the oounty deliberately purohased said bonds prior to maturity with funds acoumulated for the purpose of retiring that debt, and we believe it was the purpose of the owner of the bonds at the time of delivery to the oount y to dlsoharge the oounty from its obligations. Ao- oordlngly, it is our opinion that said bonds were automatl- aally oanoelled by said purohase, and t&refore do not oome within the purview of Seation 6, Subseation (a) of Rouse Bill #68S, whioh reads, in part,’ as follows: “All bonds or other evidenoes of indebtedness heretofore issued by oountles or defined road dietriots of this State,whloh mature a or after January 1, 1933 * * * e It must be admitted that the faoe of the bonds so pur- ohased and oanoelled provided for a maturity date subsequent to January 1, 1933, but in view of the language uaedlin Sub- section (a ), Seotlon 0 of said Act, whiah reads,as follows!

Honorable Ben J. Dean, page #4

Vhethor seid indebtedness is now evidenced by the obligations or$glnall.$ $s~~ or by re- fundlng~:obllgatlons or both it seems olear that the Legislature intended that only such lndebtedneas as was outstanding as of January 1, 1933, would be eligible to partl lcipate~,ln the moneys alloostea to the Boarddot Counts'and Dletrict Road Ind4btedXlSBB. Accordingly, we must answer~question number one in the negative. Having answered your first queetion in the negative, we deem it unnecessaryto answer question number two. Trusting that the foregoing BatlStactorlly answers your inquiry, Fro are

Very truly yours ATTORREYGENRfUL0FTEXAS

BY Clarence El Orowe Assistant