Untitled Texas Attorney General Opinion ( 1975 )

January 24, 1975
The Honorable Marvin F. Marshall Opinion No. H- 506
County Attorney
Hale County Re: Implications of a county’s
Plainview. Texas 79072 taking vendor’s lien notes
for the sale of county
Dear Mr. Marshall: echo01 lande.
You have requested our opinion on the following questions:
1. Is a commissioners’ court authorized to
accept a vendor’s lien note as partial payment
for county school lands?
2. If so, is the commissioners’ court
authorized to sell such notes and place the
proceeds therefrom in the permanent school
fund of the county?
3. Is there a particular procedure which the
commissioners’ court must follow in selling
such notes.
4. May the commissioners’ court distribute the
proceeds therefrom to the school districts of the
county, and if so, for what purposes?
Article 7, section 6 of the Texas Constitution authorizes a county to
“sell or dispose of its lands in whole or in part, in manner to be provided
by the Commiseioners’ Court of the county.” This power of the commis-
sioners’ court has been described as “comprehensive” and “carry[ing]
with it the right to do all things incidental to its proper exercise.” Delta
County v. Blackburnt 93 S. W. 419, 420 (Tex.Sup. 1906). The Supreme
Court long ago recognized the authority of the commissioners’ court to
accept a vendor’s lien note for the sale of county school lands. “Whether
p. 2281
The Honorable Marvin F. Marshall, page 2 (H-506)
a sale shall be made for cash or on credit, and by executed conveyance
or executed contract. are questions evidently committed to the commis-
sioners’ court. ” &, at 420. We therefore answer your first question
in the affirmative.
With regard to your second and third questions, we have discovered
no instance in which these specific inquiries have been addressed. In
Delta County, the issue was whether the commissioners’ court might
lawfully reduce the interest rate on the purchaser’s note to the county.
The Court refused to sanction the discount, declaring that the county,
under the terms of article 7, section 6, of the Texas Constitution. is a
trustee for the benefit of the state’s, public schools, and hence precluded
from giving away its funds. 3, at 420-21. See Comanche County v.
Burks, 166 S. W. 470 (Tex. Civ. App. --Fort Worth 1914, writ ref’d. ); and
Countv School Trustees of Brazoria County v. Brazoria County, 240 S. W.
675 (Tex. Civ. App. --Galveston 1922, no writ).
The thrust of Delta County seems to be that the commissioners’
court may enter into new arrangements for the sale of its school lands,
so long as the value of its original contract is not diminished. In
Waggoner v. Wise County, 43 S. W. 836 (Tex. Civ. App. --1897, writ
ref’d. ), the court held that the commissioners’ court has authority to
release the original vendees from liability on a vendor’s lien note and
to accept instead the obligation of the parties to whom the vendees have
sold their interest, provided that the property remains secured by a deed
of trust.
We therefore believe that the county commissioners of Hale County,
acting in their fiduciary capacity as trustees of the permanent school
fund, may sell its vendor’s lien notes and place the proceeds therefrom
in the permanent school fund, but that the notes may not be sold at less
than their fair market value at the time of sale.
There is no procedure prescribed in either statutory or case law for
the sale of vendor’s lien notes by a commissioners’ court. We are of
the view that the commissioners’ court, in accordance with its powers
recognized in Delta County, is free to adopt any reasonable procedure,
so long as the notes are not sold at I.ess than their fair market value.
p. 2282
The Honorable Marvin F. Marshall, page 3 (H-506)
Your final question inquires whether the commissioners’ court may
distribute the proceeds from the sale of the notes to the independent
school districts of the county, and if so, foi what purposes. Article 7,
section 6b, of the Texas Constitution authorizes the commissioners’
court to:
. . . reduce the county permanent school fund. . .
and.. . distribute the amount of the reduction
to the independent and common school districts
of the county on a per scholastic basis to be used
solely for the jnrrpose of reducing bonded indebted-
ness of those districts or for making permanent
tmfiroveinents.
The only caveat is that the commissioners’ court must retain in the fund
an amount sufficient “to pay ad valorem taxes on school lands or royalty
interests owned at the time of the distribution. ”
We believe that this provision is clear, an d that it authorizes distribution
of the proceeds from the sale of the vendor’s lien notes so long as such
distribution is carried out on a per scholastic basis, the distributed funds
are used by the districts only to reduce bonded indebtedness or to make
permanent improvements, and an amount is retained in the fund sufficient
to cover the county’s obligation for ad valorem taxes on the subject
property. & Attorney General Opinion H-47 (1973).
SUMMARY
A commissioners’ court is authorized to accept
a vendor’s lien note as partial payment for county
school lands, and is further authorized to sell such
p. 2283
.- _.
The Honorable Marvin F. Marshall, page 4 (H- 506)
notes at not less than their fair market value at
the time of sale. The proceeds therefrom should
be placed in the permanent school fund of the county,
and may then be distributed to the school districts
of the county, subject to the restrictions imposed
by article 7, section 6b of the Texas Constitution.
Very truly yours,
Attorney General of Texas
APPROVED:
DAVID M. KENDALL, First Assistant
C. ROBERT HEATH, Chairman
Opinion Committee
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