Case Information

*1 OFFICE OF THE ATTORNEY GENERAL OF TEXAS AUSTIN

Honorable George Ii. Sheppard

Comptroller 0r Pub110 Aooounte

Au&in, Texas

Dear Sir:

e.nd to pay Cor the en- a ~~remlum ru:. o+ t~he cur- n of The University or to a contract with a he purp033 or insuring us 0r The Unlvsrslty 8, against the loss by od or rive years comcvmclng Feb- nd expiring February 9, 1949, and ntlre prsmlus out or tho currant is tha policy or the Stat2 that all bulld- belonging to The University of Texas shall be kept

insured at all tlmos against loss by fire or tornadoes 1s expressed in Senate Concurrent Hssolutlon No. 3, possaA’ln the Second Called Session of the 37th Leglzlature, 1921. Ths first part of this resolution declares a policy thot tho State sholl carry its own lnsurrmce upon State buildlrjge XIL? Oontcnte, end that nc lmuranccr pollcles ehould be taken cut uy:cc my of the public building8 or tho oontentrr, The State Board of Control

Honorsblo Ceor~!e II. Sheppard - lae,e 2 end g& other Elonrds hsvls churge of the building6 of the State, aiiEiieirtents, were instructed not to have such bulldings nor property Insured, notwithstanding there may be items in the appropriation bills authorizing the erpend- .ltun of money for the paymerrt or lnsuranoe premiums. Uow- war, the laet part or the reaolutlon in&es an exCeptiOn of Fhhr University or Taxas, and said reeolutlon, with reference ito The University of Taxer,, ruada as followa:

"Frovlded, however, thet this rasolutlon, or 7: x. any part or it6 provlelons shall not ap1,ly to or arrect Ths Univereity of Texas, and its branches, and that . . t 16 a fixed policy of the State thst all buildioga

and oontents theraor belonging to The University of Texa6, and it6 braPche6, shall be kept insured et all time6 agalnet any loss by fire or tornadoe6.n (Underscoring ours.)

Yblle thlo ~6sOlUtiOZl doe6 not hava the emct or a gen6ral law, yet it does hsve the arrect 0r a law upon the particular subjact about which ths Resolution is made, 60 long 66 thet particular thing nor .conAltlon oxist6 or until such rosolutlon is otherwise revoked by tbe Legislature. There hss been no subsequent declarstlon of polloy by the Legislature, so the matter of the Board of Regent6 or The Univerrity of Texas taking out lneurance on the bulldlngs and contents of The Unl- veralty or Texaa 16 in~obedlrnoe to a leglslatlve Alreotlve.

seotlon 6, Artlole 8, or the Constitution or Tei.86, 'r provides,, in part:

Y?o money 6hall be drawn from the Tresrury but in purauanor of rpeolflo appropriationa made by law; nor shall any appropriation Or money be madr for a longer term than two years, . . . . . ." seotlon l,9,.Artlols 3, or the Constitution of Texas, i provider in part:

"No debt shall be created by or on behalf Or the State, except . . . . " (exception not appllcnble to this inquiry).

TWO leading oase6 in which the Supreae Court of this State decided questions pertinent to this inquiry are the oases or Charles SOribner'6 Sons v. Jdarrs (114 Tex. 11; *3 Bonorable George H. Sheppard - Fsge 3

262 S. W. 722) and Fort Worth Cavalry Club 0. Sheppard ( T8x: 339; 83 S. W. (26) 660). In eaoh or these oa6es the oourt had before it the question of a oontrnot by an agenoy of the State ror a term or rive years. ! :

In the oa6e or Charlea Sorlbner’e Son6 V. Marrs ‘(Supra), the faot eltuatlon we6 that the State Board or Sdu- eation had entered into a oontraot ior the purchase or oer- tain booke. ror a par104 or rive year6 in pursuance or a authorizing raid Board , 6ubjeot to certain llmltatlons, rtatute anter into contracts for furnishing textbook6 not to ex- coed a 61x year parlod. In thie case, the Suprels Court held that the oontraot was not in violation Of the ooncrtltutlonal llmltatlon that no aoproprlatlon or money sball be 661da for a term longer than tuo yearn, beoeusa the oontraot, under lta terms, was not one which orsated an obligation for payment beyond the two-year appropriation period, and that the contraot did not require an appropriation for a term longer than two yrarr. The oourt rurther. held that an obligation agalnat the State that run6 currently with the revenue is not a edebte within the nenesnlag of Seotion 49, Artlolr 3 Of the COii8tltU- tlon or Texsr. I In this ca68, the court said, in part:

r’ “The obllgstlon of the oontract 16 not to buy a, fixad number or amount .ot books, but only 60 many a.! a6 are needed by the aohools or the Stste. Llablll- 8:. is fixed only on ruoh amount6 a6 ‘are requiai- ty

i tloned by the truetees of the rohool6 . . . . “. ; *No quantity la stipulated and no prom166 to ‘-; pay, only an agreement to use the book6 in the i . .’ L sohOol6 . . . . The obligation to pay arises only

upon the purohasa’ and Aellvery of book6 for . . the year nseded, and aooordlng to the pur-

chaee, The book6 so furnished and 60 purohaaed during any year do not mske a charge on the fu- the State, but are paid for ture re6ourcen each year as t.he ~purohadecl are made. *It logloallg rollows that the contract ia not repugnant to that part of Sea. 6, Art. 8 of . Constitution which provider: ,*Nor ehall any ap-

propriation of money be made a longer turm than two yesrs. ‘” *4 i.. Lhappsrd - l'npe 4

tionor6bl6 G6crcra In the OIWJ of Fort %or'tb Cavalry Club v. Snrppnrd (WIUra), thr Supmna Court krld tbat I!I oontrrrot rheraby ths Adjutant Generel l ttWtpt8d to blob tha state on 16000 or a bulldlne for a Xstlonal auard Armory, with peymnts to be mar ln l nnual instello6nto over a prrlod or rive yaar6, w6m void. .Tbe Court held by etntuta, the contraot ~8 not euthorlewl and tbst undw the rxirtlm stetutso prrtelnlng to tha Adjutant 06nrrrl'a ihfmrtarat, tbr AdjuLant Oowral hod the lmpllsd power to tiW:a a oontreot wlthirr tbs linitr or the amount or appropriation and the porlod oS tbr approprlatltn.

From 6 reading or th6 r0reuoJPR oaras, it appears that ooutmot would be a valid onr It a comrtrnct or it8 ‘asturo had bssn authorlead by law, mtl under ltm taaaa onstrd no llabllitp saalnet thr Liteta beyond thr two-yarr tam of the approprltitlon. la applying the6e priao!plrcr to the rowr or the Bard or Regents to oontroot rlth ref- 6r63oa to lnsurano6 orI Lhr buildinga of tba Unlrrroity, we rind that the lloblllty for ptayoant doss not rxtsnd beyond tha tan6 OS ~318 ocrrrnt eppro rlatlon, and ~6 furtbsr Slnd an rxprrso la~S.alnt.lvr dlrrot 00, in no unoertrrln la%usge, f that 11:ouranca ahall br osrrlad on all OS the bulldlogs on4 ocntento OS Tha~errlty or Texan. In t. c. R. hi. 3, 2nd Callra Oeeelon (~upre), tbo i8ulmluturr, 37th Log., a eanarnl polloy; Olrroted Doardo and &ovarniq, bodler charg6d with the raoponolblllty ot ell Btak bulldlnua rball not take out lnauranoa on aold bulldings, aml, in that mm 3srolutlon, innar of th# Unlvrrrity Tarn6, t&a 801s axca tlm that gormm.l rolloy when it dirtacted tb4t lnsuranca SIP -__fr_, be oitr:~lrtl ~3 all building8 l ncl ooucants 0r tll6 Uuloarrity That the Board or krcmnte Or Taxbe Unlreralty, OS Tomn. rotha under llthorlty or anti in obodlance tbat express hsd 0urriolrnt euthorltp to provide rcr lrturanoa

4iraotiv0, uaaor a reorccnbla ooutraot ln liar wltb ourtomary and OS- tebllsbad good buolnarr praotloer In inourlng bu:ldlr@s or imp1166 Sror that, nnturr~ oan be rwlensbly tba lereuo~e :S ttlr Reaolut!O*.

It la a msttrr Or oo.a~on knowlrQ.6 t!mt n Sire-yaar Slra lneurnnoa policy la Sar more aoonomioal tLan lneuriw for a yenr or two yrarm at a tint*. lo a Matter of CO'P~OU know- iedp,6 tbct it io cuato.mary practlor ozi tbr Fart thoar *5 bnor-510 G6c:.Te :L rhoppnrd, I~gr

&weed alVi tiw rar~onsibillty n rirrrblo lnrrmtmat la lulldinm to tniro cut Ora lncutwwa ror a tara loaeor tn4a .90 yabrcj jr! cot, 0 ri,ta y86r pOl%Oy 18 qU%ta VO,7OOR, OUd .t is rrcn~nltcd am a aood buainasr prtIoticr. thnt no apt.cvpr:utlbib cf iwc~y oball

The limltatlon a em611 Ccr (I ton i0nf.m thur,b LWO ~~JA-U ~WJSI nat 1mJy li.d- ation On ths powar. tc wake a ovntraat for u grwt~r Lima, wnarr ha OOntraOt do68 UOt mJquir4 an approprioticn b6yuA& tha two mr period I)0 Tsxos Jurlrpr4braoo, p. Us;. Jl LL rorsi~noo 0 tha insur~44~ CuntrQot on tkr L'at:crdty lmv idldl~.., lt la leer no ?lrbflity io orootod aG.aincrt tL6 tltats bsyond 10 yrar sprroprjstlon.

Len the 0666 or Sorlturr*c 3mo v. 143rr3, (Wpra), ha oourt anld, in pert: trtm of orfior le. -T~F r3ct tte orrioiol

co-n.nronQ two yeers, t~athsr with tbs lldWLi44 thnt approprlatioa not br a3bS for 0 lV@taT @hll terx thm twr ysnm, ln argumi na lnGtOatl4& 6 6ensrsf publlo polloy, ~6 that 11) k,-rrpiUa wltt i;a%ss this 1intt'dtiGtI of two yesrs ohoull br k- plied on tha tam Of Contmotm.

'*cot:: A';bj6ot6, a~prcpr~atioAn Cd OO.itr&CtS, ara bi such lmpOrtslW6, anrl 84&i so con300 6na eo a8mantjal tbs eaWiRhItr8tiGa Gs trill aovbrnannt, tllst it is ressonmb~r pramma thnt ii it l-d been

Honorsbla George H. Sheppard, l~ape

the purpoaa of makers of tbr Cocrtitutloc to prohibit the makIng or oontraote that would extend two y1ar0, they ~0uld 011r a pd0a or DOL’~ thsn purpora plain by dl,ract rerarrnor bar0 mada to that kportent 8ubjoot.m

Tha &~Irlataro haa, tima and tlmr agaln, 4pproprl4- tea rum ror bumiryr, ipprot0mmd an6 8~ppu08 0r ai1 kind8, whloh h8t8d 98 iQN8tfMnt8 Of tha Ststr for b4yond thr tam of 'that partiti8r two-)a8r QQropriation. Appropriation8 ham near bran 1ImItod to thorr itans wham tha banafitr armtad by thr l pproprl8tion would bo l xh4u8tad by tha en4 or tha farm of the two-ymr period. Tram an an4178ir ot the appropriation oa8.8 harrln oitrd, it ap aara that the tv!c y44r lbt~tation upon tha powr to eontrao P ha8 rrfsmnor to tha tam of tha obl atlon o r8atrd l gaIn8t tha Stata by 8U4h oonimct, rather d%mi 4 prrlod tlma for whloh ths benarlts tba oontraot loay l xtand i.a favor Of thr Stit8. Tha Stat4 of Taxa hae mde latg4 inrostruntr ln The Lagislatur4 hr dlrrotrd

UniTar8ity bUildirrg8. that tirr buildlN8. A in8lW4llOa 8ha b Mtiiad On 411 Univarrity rir4 yrar r4 Irmuan44 polloy I8 a rsaroMbl4 OILI, and ruoh + pOl:Oy 18 OOJi8i8kCLt with r400&%46 and 46’tnblishrd bUllIl488 praotIOa8 with rataNuO4 to Insuriq bUtidfng8 Of that tyw. Th4 oontraot iOr iMUr4nO4 do88 IhOt OrOSt4 4 1IabIlIty 4g8in8t tha Stata which rxt4nd8 bayond tha trrm of thr 8pproprIatIon. lo tha l b88no4 of 4 rtatutr prohlbitlng ruoh 4 QOntr4ot, it thr bird Of Rogantr Or Th4 uni- 18 mr8o M bla l 88UP4 of T4I.48 had tha irplI44 4uthorIty to antar 4 X'44800- r~nlt~ tha h8tuilyl abla law buildin& O? Tar48 oontmot Of tha for Unlrorrlt~. I8 g4fi8IWllJ ha14 that thr gorarniag body Ot 4 oollaga or lllAit4r8it~ may m4k4 8uOh OOIltr4Otl 48 4CI Within tha lSa%tr or tbr authority oonfarrrd upon It by ohartrr Or and ordinarily ha8 Imp1144 OWIC do thO84 thing8 8tituta n444484ry ana oonrrnirnt to ooompl ! ah thr objaot of tha In- (14 Ccrpu8 furl8 Soo- and POt plWhlbit4d 8tftUtiOIl by hr. undue, Seotlon 1s. p* 1351, 1352-l *7 .

Honorablr Oaorgr B. Sheppard, Pagr 7 I8 thhrrrforr thr opluloa of thl.8 bpartmant that

thr Board oi h(4lit8 or ma uJlI~4r8Ic~ %X48 -8 authorlead rim Inruranoa on eater .info 4 ?:~a r84r oontnot UW bUildb# Of Tha fhliV4r8it~ Of TlX48, tOg4th4r with it8 oontratr and to w all of thr &rrmItu trap the ourrrnt ap- proprirtfdn, providad thrr4 I8 an 4pproprI4tIon for that pur- pO84.

TruBtin& rorrgoW fully Il8WOr8 tour In- quiry, n 4r4

Tour8 vary truly ATTORNZT ONRAL OF