Negro and Matrullas Rivers under the so-called Toro Negro Project.

The proposed bonds are to be issued under authority contained in section 3 of the Act of Congress approved March 2, 1917, entitled "An Act to provide a civil government for Porto Rico and for other purposes," as amended by the Act of March 4, 1927 (c. 145, 39 Stat. 951, 953; c. 503, 44 Stat. 1418; U. S. C., Title 48, sec. 741, 745), and Act No. 7 of the Twelfth Legislative Assembly of Porto Rico, Third Session, approved April 6, 1931, a copy of which was enclosed with your letter. The validity of a prior installment of these bonds, authorized by the same Act, was sustained in an opinion dated August 19, 1931. (36 Op. 452).

You state that the bonds are to be issued and sold by you at the request of the Treasurer of Porto Rico (which request has been approved by the Governor), in coupon form, in the denomination of $1,000 each to be dated January 1, 1932, and to bear interest at the rate of 42 per centum per annum, payable semi-annually on January 1 and July 1 of each year, the principal thereof to be payable at the Treasury of the United States on January 1, 1952, and the bonds to be redeemable at par, with accrued interest, on January 1, 1942, or on any interest payment date thereafter. A copy of the form of the proposed bond is submitted with your letter and you request my opinion upon the legality of the issue.

Section 3 of the Act of March 2, 1917, as amended provides:

66* * * and when necessary to anticipate taxes and revenues, bonds and other obligations may be issued by Porto Rico or any municipal government therein as may be provided by law, and to protect the public credit: Provided, however, That no public indebtedness of Porto Rico and the municipalities of San Juan and Ponce shall be allowed in excess of 10 per centum of the aggregate tax valuation of its property *. In computing the indebtedness of the people of Porto Rico, municipal bonds for the payment of interest and principal of which the good faith of the people of Porto Rico has heretofore been pledged and bonds issued by the people of Porto Rico secured by bonds to an equivalent amount of bonds of municipal corporations or school

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boards of Porto Rico shall not be counted, but all bonds hereafter issued by any municipality or subdivision for which the good faith of the people of Porto Rico is pledged shall be counted."

The documents submitted with your letter show that the aggregate assessed valuation of real and personal property in Porto Rico on June 30, 1931, amounted to $331,683,530; that on November 20, 1931, there were outstanding bonds of the Government of Porto Rico of the face value of $29,178,000; that the total amount of temporary loans outstanding was $442,494.54; and that since the amendatory Act of March 4, 1927, the good faith of the people of Porto Rico has been pledged to the payment of principal and interest on municipal bonds aggregating $1,330,500, which must be added to the foregoing, thus making a total of $30,950,994.54, to be considered when ascertaining the total bonded indebtedness which the Government of Porto Rico is authorized to incur. Therefore, it is apparent that the proposed issue will not increase the bonded indebtedness beyond 10 per centum of the aggregate of the assessed valuation, the maximum permitted by law.

Section 1 of the Act of April 6, 1931, reads in part as follows:

"That the Treasurer of Porto Rico is hereby authorized, empowered and directed to issue bonds of The People of Porto Rico up to the sum of one million dollars ($1,000,000.00), pursuant to the terms hereinafter set forth. The proceeds from the said issue of bonds of one million dollars ($1,000,000.00) shall be covered into the Treasury of Porto Rico in the fund created by the Act for the Development of the Water Resources,' approved April 29, 1927, and known as' Special Fund for the Development and use of the Water Power,' and shall be applied by the Commissioner of the Interior to the construction of the works of the Toro Negro Hydro-electric Project, including the completion of the Guineo Dam and the diversion of the waters of the Matrullas River for the generation of electric power at the Toro Negro Hydro-electric Plant: Provided, That this bond issue shall be made and sold as the work progresses, in partial amounts of one hundred thousand dollars ($100,000.00), or

such multiples thereof, as according to the estimate of the Commissioner of the Interior, shall be required to take care of the expenditures of construction, so that the progress of the work may continue without interruption

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Section 2 of said Act provides that the bonds may be in coupon form of the denomination of $1,000 or registered form of the denomination of $5,000, or both, shall bear interest at a rate not exceeding 42 per centum per annum, payable semi-annually on the first day of January and July, and shall be redeemable within twenty years from the date of issue, but reserving to the Government of Porto Rico the option and the right to redeem all or any of the said bonds at par, with accrued interest, on any interest payment date after the first ten years from the date of issue upon giving notice as prescribed by the Act, both principal and interest to be payable in Porto Rico, at the office of the Treasurer of Porto Rico, or at the Treasury of the United States, in gold coin of the United States of the present standard of weight and fineness.

Section 3 of said Act provides that the bonds may be sold by the Secretary of War of the United States, or by the Treasurer of Porto Rico, or by any fiscal agent appointed for the purpose by the Treasurer of Porto Rico, with the approval of the Governor, on terms most advantageous to the people of Porto Rico and as near the date of issue as possible; and that the Treasurer with the approval of the Governor, under the limitations prescribed therein, shall have absolute intervention and authority in all matters connected with the said bonds, including the terms and denominations thereof, and the manner, time, and method of their issue and sale. The Treasurer is authorized and directed to pay the principal and interest when due and an amortization fund for the redemption of the bonds is provided. For the payment of both principal and interest the good faith of the people of Porto Rico is irrevocably pledged.

There was transmitted with your letter a statement signed by the Commissioner of the Interior of Porto Rico, setting forth his estimate that a total amount of $300,000 will be required in order to continue until July, 1932. the projects. for which the bond issue is provided, and also a statement

signed by the Treasurer, setting forth his determinations in those matters left to his discretion, and this has been approved by the Governor in accordance with the Act of the Legislature.

I find that all the statutory requirements regarding the issue and sale of the said bonds have been complied with and that the form of bond submitted is in conformity with the law and the determinations of the Treasurer, approved by the Governor. The form of bond properly recites that "under the provisions of section 3 of the Act of Congress, approved March 2, 1917, as amended by the Act of March 4, 1927, this bond is exempt from taxation by the Government of the United States, or by the Government of Porto Rico or of any political or municipal subdivision thereof, or by any State, Territory, or possession, or by any county, municipality, or other municipal subdivision of any State, Territory, or possession of the United States, or by the District of Columbia."

It is therefore my opinion that the bonds, when issued in the amount and form proposed, will constitute valid and binding obligataions of the People of Porto Rico.

Respectfully.

To the SECRETARY OF WAR.

WILLIAM D. MITCHELL.

OFFICIAL BONDS-ATTORNEY GENERAL'S OPINION The Secretary of Agriculture in the exercise of his discretion having fixed the bond of the regional fiscal agent, United States Department of Agriculture, Juneau, Alaska, at $25,000 and thereafter, pursuant to section 14 of the Act of February 14, 1931 (46 Stat. 1114), consolidating the duties of said regional fiscal agent and those of the disbursing officer for the Alaska Game Commission, having required as security for the faithful performance of such additional duties an increase of $20,000 in the bond of said regional fiscal agent, the question whether the second bond discharged the sureties on the first bond for defaults occurring subsequent to the execution of the second bond depends upon whether the Secretary intended the latter to be a substitute for the first, such intention to be determined from the terms of the instrument, construed in the light of the applicable statutes and surrounding circumstances.

Minor administrative questions of this kind should be worked out in the respective departments without formal opinions from the Attorney General.

DEPARTMENT OF JUSTICE,

February 8, 1932.

SIR: Under date of December 1, 1931, the Acting Secretary of Agriculture wrote me, stating that Mr. Harry L. Redlingshafer had executed two official bonds, one dated December 13, 1930, in the sum of $25,000, with the Maryland Casualty Company as surety, to insure the faithful performance of his duties as regional fiscal agent, United States Department of Agriculture, Juneau, Alaska, and the second dated March 31, 1931, in the sum of $45,000, with the same surety, to insure the faithful performance of his duties in a dual capacity as regional fiscal agent, and as disbursing officer for the Alaska Game Commission. The second bond was furnished pursuant to section 14 of the Act of February 14, 1931, c. 185, 46 Stat. 1111, 1114-1115 (U. S. C., Title 48, sec. 202a), amending the Alaska Game Law, 43 Stat. 739. He called attention to a question which has arisen as to whether these bonds are cumulative or whether the second was a substitute for the first as to transactions subsequent to the execution of the second bond, and asked for my opinion, the request being as follows:

"The question herein involved is important and arises from time to time. I therefore have the honor to request your opinion on whether (a) fiduciary bonds are cumulative, and (b) if so, whether the employees required to give such bonds are obligated to pay successive premiums to the bonding company."

I could not undertake to give any opinion as to whether fiduciary bonds are generally to be considered cumulative. Each case must depend on its own facts. No opinion in this case would be a safe guide in other cases arising under a different set of facts and under different statutes.

My predecessors have always held that where a question is of such a nature as to be affected by the facts and circumstances of a particular case the opinion will be confined to the actual case submitted.

The amount of bond required of regional fiscal agents of your Department is not fixed by statute but is discretionary with the Secretary of Agriculture. When the first bond was given, he fixed the amount of such security at $25,000.