Case Information

*1 n.le state mard of~Control

Austin, Texas

Attention Mr. Clark Hright

Gentlemen: Opinion No. O-1676

Be: Construction of Art. 647, B.C.& 1926, relating to preferences of looal bidders.

ThEIlk YOU fOc YOU btter Of %'VelUbr 1939; requesting the opinion of this deyartamt aetothe proper oonstruotion of Article 647 of the Revised Civil &Etikbs of T&e, 1925, when applied to'the situation set forth in your letter, uhiohreads in prt as follows:

"In oomsotion lath oertain bids a queetiorm has arisen as tothe proper oonstruo- tioa ofArtiole 647, Bwised Civil Btatutes, 1926. On certain types of merohan- dise pvohased by the Board of Control for various institution8 of the State, there are usually several bidders. Sam of these bidders are corporations organ- ised under the laws of Texas tid doing business in Texas. Epoh of themmI&aine im stook at their plaos of business in Texas tist of the mrohandise;‘whiith, through their Ifids, theyoffer to sell the 2tate. This sumotidise is also offered for sale to the general publio. The other bidding on these items are foreign oorporations~, eaoh of whioh has a permit to do ‘busiwcls in Th.

Sme of them have agents or representatives; but 80110 of tha Mintains ia Texas a stook of the merohaudise they offer through their bids to sellthe state. in some instanoes, both state and foreign oorporations have bid exaotly the same emomt on the identical article.

8Question: Wder the faots above stated, where the bids are the same on the ideirtioal artiole, sad ass&ing that other thingsare equal,.mhioh, if any, of the above mentimed bidders are entitled to preferenoe under Article 647 or any other statute applying?"

Article 647, supra, reads as follows: 'The terms and oonditions; end th# period for whioh suoh Mds proposals are invited shall be olearly stated in the advertisement. When ihe 8sme artiole is~estimated for by two or more institutions, Imt of different brand8 or grades, such article8 shall be purohas- ad se as to produoe uuiform$.ty in use by eaoh institution, and other things being equal, supplies offered .ly bidders who have On establ%d-ml 100~1 'hlSine88, shall have preference.8 (Wdersooring ours).

Artiole 647 as originally enaoted As Seotioa 4 of Senate Bill HOO. 172, Aots 1699, Tmmtty-sixth Legislature, General Laws 1699, page 136, and read in *2 State Poard of Control - Page 2 (C-1678)

part as follcms: ". . . The period for which such bids or pmp88als are invited shall be olsarly stated in said advertisem8nt, a8 8811 a8 the tern and 8onditicms oontaaplated by the provisions of this ohapters rhen'the ssme art1818 i.8 estimated for by '818~ or more inStitiiOn8, hrf of different hrand8 or grades, the pumhasing agent may determine vh.ioP. of the brand8 OT grade6 shall bapurohamd 80 as to produce ruPifOrmiti in'118e by all the iXI8titutiOnSr

The Seotion in question (nor Article 647, Revised Civil Statutes, 1926) becsrme drtiole 7328 of the @viead Civil Statutes, 1911, andwas not materially ohanged. However, in 1915, &tic18 7328 was amended (Act8 1916, Chapter 126) 80 asto appear lath8 8-e form a8 the present Artiole 647 of the &,V%Sed Civil btptutes, 1926.

W8 oall your attention also to Art1018 650 of the T&vised Civil Statutes of 1925, whioh read8 a8 foll8vsr "The,Board may advertise for the various arti- 0188 and supplies nesded eithar separately all together, and mqy aooept a bid for ths s-e to In furnished either separately or all byone bidd8r. Pmfemnoe Shallbe given, all thiag8 b8%ng eqUI&tO stat.8 pmduots." (&dersoo&%

It may be aeon that th8 h8gislature haa directed its igeats t&t the policr~r to be pursued in making its oontraots should be to favor Tm 8ono8ms and Texas produots owr out of stat8 pmduots and business establi&me&~, other thing8 being equal. From this interpretation of the legialativu intent in 8n- Poting the88 statut88, it is OlePrthEt under the fE8tS presented in your letter, oorporate Udders organi8ed under the'laws oftbis Stat8 aad doing laz8lness.in this State, ,should be givun preference under ktiole supm, over foreign oorporate bidders having a permit to do busin in this State, but not main- taining Stock8 Of I8erOh886dd.88 in Texas*

Perhaps a queati~oa might be raised a8 to.the authority of the Legisla- ture to 80 disoriminate against forsign corporate bidders. kuwer, u8 be- liave that&an the State has east off its olbak of sovemignty, and ha6 stepp8d forward in its pmprietarg oapaoity, it may oontraot a8 8xy individual or pri- vate corporation. Just qs an individual or private corporation may dea it good business to givu preferenoa to Texas produos and Teas busimess 88riXblish- meats, 80 also may the Rater

Paragraph 3951 (3), Volum8 144 Corpus Juris, page 1251, reads in part as follows: *A oorponrtioa is not a 'oiti8en' dthin the meaning of that olause of the.Fbderal Constitutionrhioh deolarea that the oitiz&s of each &at8 shall be wtitled toall the privilegea and d8v8unitiks of oitize~ns in the saveral states, or the olause in the Pourteenth &aendmant providing that no stats shall make or 8afW8-8 oag law nhioh shall abridge the privilege or inrmun- ities of oitiaena of the United StdeS. Th8y ammere OreatUF38 of the local law, wtitled to moognition la other states and toths enforoem&i of their oontraota thsmia only on suohtermr a8 suoh 8tatas may se8 fit to impose. *3 State Board of Control - Page 3 (O-1676)

Therefore, these clauses do not r&feat the mle that a oorporation created by one state oam &eroise noxe of the f7m~tioaa or pu-ivilegsa oonferred by its oharter in env other stats of th8 Baion. exoeut tithe oumity awd oonsent of th8 latter. It follows that a state may diso-&i&at8 in favir of its uwa oorporetions against oorporations ohartered by another statstand suoh dis- oriwiIIptiorp 18 sot unoonstitutional as a di8oriminEtiOu EgPinSt the individual oitisens ofth8 other state. As to the nature aud degree of disoriminatioa, it belongs to the state to detenuine, subjeot ouly to auoh limit&ions on her soverei&q as may be found in the f'uadsmeatal law of the Qion. . . -8 (Tkdersooring ours).

It is well sstabllahed byth8 dsoi6ions of the Supreme Court of the United Statesand the Texas Supreme Courtthatin entering into6 oontraot a state lay8oside its attributes of sovweigwty and binds itself sub8tautially a8 oae of its om oitisens under his oontraot, and the lawwhioh m866ures individual rights and responsibilities measures with few exoeptioas those of the states.

Ra-hnan v. Greenbow, 102 U.S. 672, 26 Law. Rd. 271) Poindexter v. Greenbow, 114 U. S. 270, 29 Law Ed. 185; Keith V. Clark, 97 U. 8. 464, 24 Law Ed. 10711 Murray v. Chvleston 96 U. 8. 432, 24 Law Ed:760; Charle~~ Soriherat Sons v. krrs, 114 Tar. 11, 262 6.W. 722: Conlsy v. Daught8rs of the Republio, 106 'Pew. 077, 166 S.W. 197. See also 36 Cyo., PpgsS 669, 671s 26 Ruling Case Eaw, Section 25,, page 392.

Conssqusntly, you are respectfully advised, End it is the opinion of this deparbnent,.thatwhan equal bids are subzittad to the Bxard of Control in aooordanos~with the prwisions of Chapter 3 of Title 20 of the Ravissd Civil Statutes, 1926, by a TeX68 corporation and a foreign OorporEtion, and all other ooIcSid8IrationS are eqUd, it is the duty of the Stat8 Board of Control and its purohasing agent under Artiole 647 of th8 Rsvised Civil Statutes of Texas, 1925, to give preferenoe to the TeXrS oorporEtiono

Yours very truly JSsFGtegu

ATTCREEIGEBSRALOFTEUS APPROVED Nov. 20, 1939 @J /s/Walter R. Kooh'

/s/Gerald C. &nn Walter R. Kooh ATIDRRET GEB2AL OF 'Ex*8 Approv8dt Opinion Cmimitiee

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