Case Information
*1 OFFICE OF THE ATTORNEY GENERAL OF TEXAS
AUSTIN
Honorable D. C. Greer
State El&way En&nesr
Texas Highway Depsrtment
Auetin, Texas
Dear Sir:
ju4gwnt in caum n the 98th Dirtrlot ik County, Texau, 4ePont deN&aoure & laintitie .va. Brady J, Chairnan of the State CowmllrEtlon OS TsxfM, et ridante, and a relate4
Tom Arohsr an4 improvement an4 oontraat was awarded to him for thle work on May 27, 1932. The oontraotor began work on July 18, 1932 but after perf'orming one montha work on thle contract he defaulted an4 a receiver wae gon. D. C. Greer~, l’age 2 proceeded with the rti-
appointed. This receiver fill&ant or this contract but at the request of the eurety company the reoelvsrship was dissolved and the surety oompany took over the oonetruot~on Or the project on Deoembsr 31, 1932. On or about.
I;ay 4, 1933 t&e surety oompany defaulted an4 aft6ir having been given notloe by the Stats Highway Duv partmcmt to oomplat@ this projeot ati they tail&& to raaume work In l ooordanoe with the oontraot the State took over the completion of thla oontraot on N&J 13, 1933. To oomplete this oontraot the State NoalVs4 bids and awarded a oontraot to thr womaa)t- Henning Construotlon Compsny for the remaining work.
OR June 29, 1033. h’hlle the work as required by thlr oontraot was phpsioally oomplotod on Ootober 10, 1935 the oontraot has not as of thlr data, been oomplrted duo to the iaOt that the State wlthheld frosmbnfae due ths oontraotor funds on aooount or labor and materials olalma having been illed with thr Department. the Womack-Henning Construo- “After paylag
tion Company the amount due thti far the oompletlon oi thin oontraot tha State now ho148 a balanae ai Ql,g+S.CS of the monies due the oontraotor on ao- aount of this projeot. Rsoently &. I. DuPont Do Nemours and Company fllsd suit agalnet the oon- traotor, his surety oompany and the State Highway the oontnc- Department to establish a llan against torr funds tbat wo now hold. on Novanber 3, 1943 the Dirtrlct Judge of the 9Sth Dirtriot Court of Travla County’ entered a judgment against OOO- traotor and the surety oonpany and the State Or The requirement6 of tbir Texas for the #1,835.44.
ju4gmant are that the Stats of Texas pay into iiegiatery tha Court the funds of the oontraotor now holds to be distributed various In thi8 persona who have filed and did establish their claim ror labor $$.n4 mataridls in eon- oourt oon8truotion 0r thir projeot. neotion with #hen the State Highway ComQiOaiOn raOOivO4 Oikrt%on in oonneotion with thir suit this iniOrlUEition was *3 pk. D. C. Grew, Face 3
passed to your ofilcs an4 your oifioe made a oonstruotire tendei of the $1,835.46 funds OS the oontraotor into the Flegirtary of tha Court.
“In oonneotion with the $1.835.45 fun48 that the State now holds, It is our thought this money is the property of the oontraotor ati 10 bring hel4 In the Trraaurp althor to pay to him pay to olalmantr In the event that the olaim la eatabllsho4 In a oourt of oompeteat jurladiotlon, the Stats being maraly a ataka holdar of the8a runas,
Vln quortion haa now been ralae4 as to *ether the aontraotora run48 oan be wlthdiuwn rrom the Stata provision tbat Treasurer duo to tha oonatltutlonal the Lsglalature baa authority to appropriate funds not lon(;er than two yeara.
*The Leglalaturo every two years reapproprlatoa all State highway funds not previously expanded am roll as all new run46 oualug Into the Trearury an4 it 18 our thought that all unexpm4ed funda ror oon- obligationa reappropriated by the Legla- traotual are lature eaoh two years for the payment o? tha State’s as well as otha obllga- &~-stlonr on woh oontraot .
WArtiola 5472 (b) requlraa *that no pub110 offlolal, wha 80 notlfie4 ln wrIti!&, #hall pay all of%ati monies bond or warrants 80 said oontraotor, btit shall ret& enough of asi4 W&88, bonds or pay oaid olalm, In 0866 it 18 l atablirhe4 warrants by ju4gmant in a court or proper jur1a4iotlon----*.
Under thlr statute fund@ that were 4ua the oontraotor wern retained on account of the filing of labor and claims an4 tha Stata would bare bean in material violation statute6 had lt paid all tha monies upon phyaleal to the oontraotor omplrtlon of the work oallod ror by the v4ontraotor. -The State only now is $0 a position to lagally di~poae or tha funda or +b ocntraotor, judgment having been rendered on November a, 1943 agalnrrt aontraotor In favor It is %hWght that the state la of the Olalmants.
Hon. D. C. Graer’, Page
n_ot at thia time barred from the oompletion of Its oontraotual obligation.
WSaotlon 0 0s Article VIII 0r the State Constitution provider that *no money shall be drawn from Treasurer but in purauanor of the ~peoIfie4 appropriation made by law; nor shell any qqropriatlon of money be 11~340 for a longer terma than two year+----*.
“We would llkr an opinion from your ortioe as to whether or not funds are available for ’ payment of the balanoe or the funds due under thl8 ‘OontMot at this time. wArtiola 4SS7 provides *no olati shall that
Abe pal4 from approprlatlona unleaa proa@nted to tha Comptroller for paymakt withln two yemra 0s the SlsOal yeara for whloh auah approprlati,on was m&e---- * , to have an opinion from
we ~~14 further like your offloe as to whather not the Stats la barred from making payments on aooo*unt of a oontraat wha% fund8 were held by the State on aooount Of the flllng olal~ under Article 5478 (a) au4 (b) when payment 00~14 not have been ~aa4e wdthln two year8 from the oloae of the fleaal year from whloh auoh appropriation was made duo to the fact the claim had not been released or a~ judgmalt entered prior to this time.
*For your Information thora la attaehed hereto a oopy of the judgmmt In Cause No. 68639 In the 98th Diatriot Court oi Travla County,’ Texar in the suit styled E. I. DeFont De Nemoure and Company et al. Vs.
B&y y. tintry, Chairman of the State Highway CODD- mlraion or Texas et al.*
#e shall anawer both of your ques~tlona together a8 the first question la speolflo an4 the asoond queetlon la mere- ly a general one dealing with ths mame aubjeot matter.
HOI%. J-ii. Creel', PsigS 5
Ant% your Ik18 set out In detail the pro- lottar vision8 of the Conrtltution and the Aatute8, we will not burden your tint8 by relteratlng the came herein.
In the oa8e of Texae Colnpeny P. Sahriewer, 38 3. w. (Ed) 161, Court hold that Art~ciee 5478a end 547Zb, Vermm'8 tinnotated Civil iitatuter, gave nub-oontreator8, es well a8 gea- a 11~ oa money paid for public era1 elmtraCor8, improve.aQnta. III that oaoe further held that That Court the tit&to Elghway De- portment in rlew of iirticle8 6078 6674, and nrtiole8 66140, 66748, 66741 and 6694, hev8 8upervl8loa over the expenditure of hlghuay funds and State Reaeurer I8 merrly a depooltory of suoh fundr.
It ha8 been held by the aourtr of Tara that all state hi&hwayr are under the oxolusl~o ooatrol and management of the Ytnte Blghwey Department.
The Court held In the 0a8a ot Atkin V. Texar Highway Department, 801 3. W. i%6, that la deelerlng th5t the Legirlature all funds malag into tb head8 of the tjtete Blghwap Coaslr8lon derived iron ro@8tratIoa fee8 prerorlbed for motor vehloler, shall bo deposited with the State or froa nap other 8ouroe. 8pealal aoaorurt de8igAated as the "State Highway
Treasurer Fund" aooount, and that 8srtlu I8 a valid approprfetlon, though not, bf oourse, 8peolfylng ammats to be realized; 8imilar prorIslon8 for oontlngent amount.8 having long been reOW!iiZsd a8 valid approprlatioar.
ktia~le 4357, Vernon’8 j¬ated CIvIl Statutes, pro- vider a8 Sollow8:
** *'* No olalm shall be paid fiosl OQprOprie- to tke Oonptroller for pay- tlona unle88 praaented mnt within two (8) yeer8 from the olO8e o? the ilace far whIoh such epWoprIatIon8 were made, year but any alala not presented for payment within 8uoh period smy bs preeented to the Legl8leture a8 other ere l vall*ble.* al~ims tar which no appropriation8 * 5" In the ou8e of winder t&08. v. Sterling, 18 S. K. (Ed) 127, the Court, on page UO, in dealing with lien olaiaentr r,im.i- *6 IX=* 2. c. Crder, pug0 6
zdto these ao pirtles in the aaae presented ia your inquiry,
:-
CTho ~rorlslon for wlthholdlng Boney, war- ror paymeat ,0r a olala 88 and wh8a rants, l to., redwad to judgznnt, wlth laak of requirement for Judfgant wlthla say given t&110, it i8 said, render8 IndePlalte. To this 18 added a ohrlrge the statute axbitrariLtO88 ia forOh$& th8 OOUtreOtOr t0 aWatt the plecIi.un of the oiaimat In respeot to time of juegmnt. however, but Paw8 oaa- ‘&a statuSe, in ad l pproprlato tueacy upoa time eoourreaoe oa84 awneye, eta., become due and payable to the aoa- and for rhloh, OS noted, part.ie8 traator, and inputation) stipalata. 88- aoatraot (by reference no Teasoa 18 l gpapay ent for p*eoluaIn6 adjudi- aldee, .oatIon oi the okaita or its Ir&vaJ.idStr oa 1o1e of th8
eontra&tor, It he becoa88 di88oti8fled with pxvores- tlaatloa of tha Olal0sa:~,*
da apia on pago 189, the Court Said;
*+ + * ?baia(l SUbjOOtS of ii&LB and ttm * OOOdltIO~S for their regI8tretloa ana l nforoemeat is a tamillar legI8latlre p0wer. We are glrea a0 (and wa know 0r none) against ratfaronoe to preoedentr 0r pub110 moneys aad SOO~itieS lnclu8ion or tE8 legI8latln('8overeIga, (a8 and whoa payable or de- liverable to oontraotors, eta.) within the StAb3OOt of llens deolsred for materialmen. meohanIor. mttor irncl when the Mea (in this ehuter-proriaed) - l to. ottao&ea. t&a 0xODer8y to which l ttaohes la thr, pr~r~W of the OOntreOtInR debt&r and WA or the state or muaialpal~ty. tlm latter being debtor 0Z that aebtor baIlo8. eta. 00rr0x00, there is a0 ooatempt of the letter or spirit of Section 2W. artiolo 3. OS the Constitution, to whloh we a8eWDI oounsel Intsnded to refer.*
i
In the ease oft Wepubllo Niatlonel Bunk an&'Trust Com- WY v. YasBaohuOetts Bonding t fnsurenee Company, 68 Ted. (8d) d3, Honorable Judge Sibley of the Cirault Court of kppeals, in in which the surety oa the bond of th eon- &lIng with the okso traaetor wna suing to recdl aoneys that had been paid out by the oity on tha RTOPOSea a*slgrrpLsnt 0s the aontraotor bank, be- fore tba urriaavit about mentioned in proof 0s pay:wnt 0s all @lab8 hed beed -a., said in plain la~gurrg8 at pago 447, with nferenoo that rbet sItuotIoA, a8 fOisOW88
Wls (the sursty*a) equity originates in the agreement the bltf and the contrmtor, relnrorcea by the aot 0s 1989 to the am8 errrot, thrt oertaln peroentages 0s the earsed papwmts uhall be remned for Y final payaent.ror the maurlty of th, olty and sumty, and equity treating this fund as a trprt will appllaatloq, raoalling it ii see to Its protectloadna f3iSappliad. This IS the hOart of tbs bill. Prairlo State fiatlonal Bank v. United States, l&d 0. S. Ic.27; Olader County v. Dotraft Fldallty k Surety Co., 57 F.
(Ed) 449; pirat Baak v. lfdellty & Deposit rational Lh DepOSit CO. Of Lbp 65 P. (8a) 9b9$ Fideiit~ $4 v. Claiborne Parrlrh bohool Board, 11 F. (zd) 404.” In tb8 0~86 Of Jsaith t. TUB ciW&~~y, 33 8. W. (3d 1 774,
8t page 797, the Court said:
"Senate 3iil 94~, kOt8 39th L8gISlaturO (lU3S) ( Arts. 6694a-6d74n) was *a- c. le6, P. 456 (Y.A.C.S. aotoa by the amme LegiS&Gum whloh paarea krtieler 547er ana 5470b.
*It provides that State shall retain 10% 0s the oontrpaet price tmtll work htrr been aooepted, fIAal paywnt of tha retained and it exm=eooly r0rbIas SUm until 18 shows *all 8~8 of monel due for any labor, materills, or equIpmAt furnished for the purpoue Of SuOh iroprOvtiUiOAt8 sado under any Such aoa- trvot have bOOA paid.* sad. 13 0s the ket (v.~.c.ii., It IS groper to ooaet~ue this xot 50 a iat. dd7apl) . ;‘art 0s the lo@iletlon In ques- pravldlng for the lion tlOA, 88 it rehte8 tQ the BeiM SUbdebt BurttaT and %?+a &Weed at 8811, !I8selon JI the Lsgf81ature.m
511 nnd again nt the top of Pugh 777, the Court said:
"It was the lnteiltion of the hglslature to enable those lurnlehlng L:bor, mterlal, eto.
to a sub-oontraofor for any‘~ubLlo im2rove~nt to the extent 0r any theretor to receive paymat unpcrld balance due raid cub-oontreotor the at 18 given. tlu@ notice required by 8tatute Vie 6180 oonolube ruin6 or the thht notloo wlth stuto Highway CoPsef88lon *a8 a 8triOt 0~3piianQe With the WOVl8iOn Or th8 8Ot, which r8qulre8 the 8.aa8 to be riled with Or- rloiel, whove duty it 1s to p&y the orlglnal oon- Ihinder i&08. v. sterling, ll0 Tex. 2bB, tractor.
12 6. ik. (2d) 127, 14 Y. W. (2d) 808; !detropolltan La8ualty In8. Co. v. Chean8y, et al., (Tex.,Clv.
..&I.) 92 a. n. (2d) 801; iseet Chicago Perk Com*r8.
v. iiestern &mite Co., eoo Ill. 527, 66 I@. P. 37; ILlLO., ‘I.. Jer8ey City, 62 N. J. Ea. JaUu38 p. iidi, 489, 60 n. 603.
n. . * to the oredlt Or the
*all sonay deposlted highway rUnd IS by the teXYII8 Of artiole approgrlatlon ror tba 8;reOiriO
made subject purpoee 0r oaid iqrovetint 8ald ay8tem or 8tat.e hi&way8 by the highw8y d8partmant.
"It thua a?pamr thnt the Legislature has eatabllshed a 4epart:snt and clotbed it with iull sake oontmat8 ror and complete authority hi5bwayS and created a epeoial is2roverpnnt of ekte fund out of which the ObligntlOa8 *de by such de- ptirt3xmt 8bU11 -be dlschiirged. 'i'he hlshway 000!3&8- slon ie charged with the duty or laying thee8 obll- gationr from this epaoia]. fund. shea oonalderatlon is given to the sttrtutes ve8tlng control over de- sign&ted stiite highway* in the atate hi&my ooml8- alon, and uuthorlzlng suoh body to oontmot and ex- pmd fun%u eet ag~!irt for that purpose. beeowe obvious that such dep0t:mnt is the cne whoee duty *9 it 13 to pay oontnctora tar work perrome upon It is true that the 8tnte et&to highways. actually tredm-er
pay8 outthe mcdy on depoelt to the oredit
of the highway department, a8 is generally the oase ath au obligations izk&e by a 8tate de'partmnt ror ana on behdr 0r the stite. Ete does thi8, however, E;S a mre dlsburrrlog officer and on VoUOhsr8 issued and agi.~roved by majority of the highway SoimIi8SlOlI. 0r oontrtsotorr iie ha8 no di8OretiOn in paying olelms when they are properly approved by the highway Oo!uniS- CertAnly suoh dlsoretlon wa8 intended to be slon. lodged with the official Who80 duty it 18 to pay Orr and dl8oharge suoh obli~ation8. The Leglalrtture might kve nmde ~rovlslon for the 8paolal highway iund~to be deposited Ii in 8oae prlviite banking institution.
it bud done 8o, stio~h bank would actually pay the iseuad by the hi&way departaent, but under vouchers such CirOWZStiMiCe8 it Could in ru) proper 8eD88 b8 0011- whose duty it un8 to pay ooa- sldered the oiflolal traotor8 fur 8erViOe8 perromed Under th8ir oontract8."
In the case of F. C. Crane v. Chue. C. Bellar, aotlon to 6. iii‘. (id) 167, Court held a materialman* that establish a llen on money8 due or to beooze due to a pub110 such a llsn on the eontroctor under the statute authoricing notice .i8 a specie8 0r "gsrnlrhnnnt;" Vernon*8 riling iuxmtated .itatUte8, tirticle8 5150, 5372a, 547Eb, 6674~ By reason or the toregoing authorltle8, is opinion of this aepartinent Legiednture hn8 put the money ordered paid by the oourt in the judgwmt in the o&80 or Ii. I. duPor,t deNemour8 k, Company, et al, v. Brcidy P. tintry, Cholman of the ktute iii&may Comrslsslon, et al, beyond their rurttrer pox-er to reapproprlate the 8a:~.
Th8 money retain66 by the Hlgharccy l;epartmnt on the original cmtruet, a8 uwae fsll due and becnse impounded by the filiug of oOtiOe8 by lien Ck.3iiWlt8, hje placed such fund8 upon which such lien8 attached at the tii2.e 0r the riling 0r such notloee, out of the hands ot the Legiskture and the r;t,::e of Texes, an& said ;noney then 6eom5 the property of aon- truotlng debtur or hi8 8ub-oontraotor or lien o,laimant8 as the *10 F
513
oourt may decree, and wae no l.onP,ar property of the .Xate, t& Litat& belag raer6ly a dobtot or debtor abovr ballee and 8uoh money bocam ln law a trust fund held by the State of- fioia1.a Tar floe1 payment in acoordance with judgwnt of in da 0aiU. We are, theretore, or opinion the court tbt gha dlsburziemsnt oT euch fund8 at thla time in accordance with the judezent of the oourt in such aaae would not be in or drtlale eontraventlon 8, Section 5 or the Conatitutldn at ‘PU~I, end, thereforr, Article 4357, 8ugra, would not epply.
gusting thl8 letter an8vmr8 your inquiries utlrfnctorily, we be6 to remain
Your8 very truly