In re Sch. Fund

• Decision Date: 31 January 1884
• Citation: 15 Neb. 684,50 N.W. 272
• Parties: IN RE SCHOOL FUND.
• Court: Nebraska Supreme Court

15 Neb. 684

50 N.W. 272

IN RE SCHOOL FUND.¹

Supreme Court of Nebraska.

Jan. Term, 1884.

Syllabus by the Court.

1. The board of educational lands and funds have authority to invest the permanent school fund in United States 3 per cent. bonds.

2. Payment of premiums in purchase of United States bonds should be made from the permanent school fund. Payment of premium in purchase of county bonds should be made from temporary school fund.

3. In purchasing high rate of interest coupon bonds the board cannot detach coupons therefrom so that the remaining coupons will net the state 6 per cent. from the date of purchase to maturity.

4. After investment in United States 3 per cent. bonds, the board cannot sell or convert them into other securities. When paid, they may be reinvested as the board deem best.

This is a matter coming before the court by the following letter:

“OFFICE OF THE BOARD OF EDUCATIONAL LANDS AND FUNDS.

LINCOLN, NEB., Nov. 13, 1883.

To the Supreme Court of the State of Nebraska:

We, the undersigned members of the board of educational lands and funds, would respectfully represent that a doubt exists in regard to the construction of section 9, art. 8, of the constitution, and section 29 of an act entitled ‘An act to provide for the registry, sale, and general management of school lands and funds,’ approved February 24, A. D. 1883; and, if not inconsistent with the duties of your honorable court, in order to further the proper execution of the law, we would respectfully solicit an opinion upon the following questions:

First. Can the board of educational lands and funds, under the said section of the constitution and the law, invest the principal of the permanent school fund in U. S. three (3) per cent. bonds, either at par or at a premium? If so, can they pay a premium therefor from the temporary school fund, or will the board in paying such premium be compelled to draw from the permanent school fund therefor?

Second. Can such board, in purchasing a high rate of interest registered county bond, detach coupons therefrom so that the remaining coupons will net the state six (6) per cent. from the date of purchase to maturity?

Third. Have the board, after purchasing U. S. three (3) per cent. bonds for the permanent school fund, the power under the law to sell or convert such bonds into high rate of interest registered county bonds?

Respectfully submitted,

A. G. KENDALL,

Com. Public Lands and Buildings.

E. P. ROGGEN,

Secretary of State.

ISAAC POWERS, Jr.,

Attorney General.

JAMES W. DAWES,

Governor.

Members of the Board of Educational Lands and Funds.”

OPINION OF THE JUDGES.

To the Honorable the Board of Educational Lands and Funds:

GENTLEMEN: Deeming an answer to the questions propounded by you in your communication of the 13th inst., respecting the investment of permanent school funds of the state not inconsistent with our duties, we submit the following:

To the first question, taking them in the order in which they are put, we answer that you clearly have the authority, under the sections of the constitution and statuteto which you refer, to invest those funds in United States 3 per cent. bonds if you deem it advisable to do so. The doubt you mention of your right to invest in these 3 per cent. bonds was prompted, very likely, by the low rate of interest which they bear, together with the proviso in section 29 of the act of February 24, 1883, (Comp. St. append. 1883, p. 887,) relative to investments in “high rate of interest bonds” of counties, which cannot be made so as to net “a lower rate of interest than six per cent. per annum.” But this restriction extends, at most, only to the purchase...