June 13, 1967
Honorable Robert 5. Calvert Opinion No. M-89
Comptroller of Public Accounts
Austin, Texas Re: Construction of Article
666b, Vernon's Civil Stat-
utes, as amended by Senate
Bill 504, Acts of the
60th Legislature, relating
to lease contracts entered
Dear Mr. Calvert: Into by the State.
Your request for an opinion on the above subject matter
asks the following questioner
"(1) Can I legally sign a contract for
a period of time extending beyond the explra-
tlon date of the appropriation for rent be-
coming available on September 1, 1967, which
would be August 31, 19682
"(2) If you hold that a contract can be
made extending beyond August 31, 1968, must the
entire amount of the contract be paid out of
the appropriations available for the fiscal
year beglnnln September 1, 1967 and ending
August 31, 19t8%'"
Article 666b, Vernon's Civil Statutes, as amended by
Senate Bill 504, Acts of the 60th Legislature, Regular Session,
1967, provides In part:
"Section 4. Hereafter all departments and
agencies of the State Government, when rental
space Is needed for carrying on the essential
functions of such agencies or departments of the
State Covernment, shall submit to the State
Board of Control a request therefor, giving the
type, kind, and size of building needed, together
with any other necessary description, and stating
Ron. Robert S. Calvert, Page 2 (M-89) '*
the purpose for which It will be used and the
need therefor.
'Section 2. The State Board of Control,
upon receipt of such request, and if the money
has been made available to pay the rental thereon,
and If, In the discretion of the Board such space
Is needed, shall forthwith advertise In a newspaper,
which has been regularly published and circulated In
the city, or town, where such rental space is sought,
for bids on such rental space, for the uses lnd;;Fted
and for a period of not to exceed four years.
such leases shall be contingent upon the avallablrlty
of funds to cover the terms of th 1 It I fur-
ther provided that monthly rental: my","% paid tn
advance when required by the lease agreement and
mutually agreed upon by the lessor and the lessee.
After such bids have been received by the State
Board of Control at Its principal office In Austin,
Texas, and publicly opened, the award for such
rental~contract will be made to the lowest and
best bidder, and upon such other terms as may be
agreed upon. The terms of the contract, together
with the notice of the award of the State Board of
-
Control will be submitted to the Attorney General
of Texas, who will cause to be prepared and ex-
ecuted In accordance with the terms of the agree-
ment, such contract In quadrupllcate; one of which
will be kept by each party thereto, one by the State
Board of Control, and one bv the Attorney General
of Texas. The parties to such contract will be
the department or agency of the government using
the space as lessee and th t t1 th
space as lessor." (Rmphas?sP%d~dr~n' ng e
Pursuant to the above quoted provisions the State Board
of Control upon receipt of a request for rental space by a State
agency will award rental contracts to the successful bidder for
a period notto exceed four years. One of the provisions which
we ~111 state In the written contract form will be as follows:
"This contract and lease agreement Is made
and entered Into In accordance with the provlslons
of Senate Bill 504, Acts of the 60th Legislature,
Regular Session, 1967, amending Article 666b,
Vernon's Civil Statutes, and Is made contingent
upon the avallablllty of funds appropriated by
the Legislature to cover the term of the lease."
,
Hon. Robert S. Calvert, page 3 (M-89)
Thus under the terms and conditions of the contract
awarded by the Board of Control pursuant to the provisions of
Article 666b, Vernon's Civil Statutes, the contract does not
obligate the State beyond the avallablllty of funds appropriated
by the Legislature. Accordingly, such contract will not create
a debt, Cfty of BIR Spring v. Board of Control, 404 S.W.2d 810,
(Tex.Sup.mb6). In that case an attack was made on the viilldlty
of a contract for a subply of water to the State because the term
of the contract was beyond current appropriations. In rejecting
this contention the Supreme Court stated:
"The contention that the purchase contract
was Invalid because there then existed no legls-
latlve appropriation to pay for the water to be
furnished in the future Is answered by this Court's
opinion In Charles Scrlbner's Sons v. Marrs, 114
Tex. 11, 262 S.W. 722 (1924). In that case an
attack was made on an order of the State Textbook
Commission purchasing certain textbooks for the
public schools of Texas from Scrlbner's Sons.
Among other objections It was urged that the
contract to buy textbooks for a five-year period
was invalid because It was for longer than the
two-year period of legislative appropriations and
created a debt which could not be paid for out of
reserves for the biennium fn which created, This
Court said:
UOThls contract obligates the state to ln-
traduce into and use relator's books In the public
free schools for a period of five years. It ob-
Sfgates relator to furnish, offer,~and sell these
books to the state each year for five years, upon
the requisition of the school authorities each
year for such books as may be needed. Payment
,'for them Is to be made out of the current fund
each year as they are purchased. 'Iheobligation
of the contract Is not to buy a fixed number or
amount of books8 but only so many as are needed
by the schools of the state. Liability Is fixed
only for such amounts as are requisitioned by the
trustees of the schools, The number of books pur-
chased for any year and the amount of money ap-
plied thereto Is wholly within the control of the
school authorltfes.
'#The contract Is for uniform text-books for 1
a period of five years. No quantity Is stipulated
? 405 -
Ron. Robert S. Calvert, page 4 (M-89)
and no promise to,pay, only an agreement to use :
the books In the schools. The statute and the
contract provide that no debt Is created. The
obligation to pay arises only upon the purchase
and delivery of books for the year when need.ed,
and according to the purchase. The books so
furnished and so purchased during any year do not
make a charge on the future resources of theism,
state, but are paid for each year as the pur-
chases are'made.'
'This Court quoted from the case of City
of Tyler v. L. L. Jester & Co., 97 Tex. 344, 78
S.W. 1058 (1904), in which a long-term water pur-
chase contract was attacked: 'The making of a con-
tract for water for a number of years, to be
delivered In the future dld~not create a debt
against the city, but the llablllty of the city
arose,;pon the use by it of the water during each
year.
The Court then concluded:
'The contract of the Board of Control with
the City of Big Spring ia a valid contragt and
Is not subject to the attack made on It;
Under the contract Involved In Clty,of Big Spring v.
Board of Control, supra, the city agreed to furnish water at a
Id t .' long as the State of Texas shall In
rna%aTi >dazperate said hospital on said site.' to
Big Spring State Hospital.)
In view of the provisions of Article 666b, Vernon,'s'
Civil Statutes, as amended, the terms and conditions of the
lease and rental contract entered Into pursuant thereto and In
view of the decision of the Supreme Court In City of Big Spring
v. Board of Control, it Is our opinion that any obligation created
b th II f the proposed lease Andyrental agreement will
t~rmlEatse?p% itie expiration of exlstlng appropriations for rent
unless other appropriations for rent are made available prior to
such termination. Therefore, no obligation exists beyong current
revenues and such a lease and rental agreement would be valid.
You are therefore advised that you may legally sign a
lease ,andrental contract awarded by the Board of Control pursuant
to the provisions of Article 666b, Vernon's civil Statutes, for a
period not to exceed row years, in the event there is contained
-4060
:.
,.
. ,
Hon. Robert S. Calve&, page 5 (M-89)
In such lease and rental agreement that the lease and rental
aff;;ment Is made contingent upon the avallablllty of appropriated
In answer4o,.ys:+z?
second question, If a lease and rental
contract Is entered Into pursuant to the provisions of Article
666b, Vernon's,Clvll Statutes, for a period not to exceed four
years, which period extends beyong August 31, 1968, and such coon-
tract Is made contingent upon the avallablllty of funds appro-
priated by the Legislature, the entire amount of the contract
need not be paid out of appropriations available for the fiscal
year ending August 31, 1968, but may be paid In accordance with
the terms and conditions of the lease and rental contract out of
monies thereafter made available from appropriations by the Legls-
lature.
SUMMARY
Article 666b, Vernon's Civil Statutes, au-
thorizes the execution of lease and rental agree-
ments on behalf of State agencies for a period
not to exceed four years and provides that such
leases shall be contingent upon the avallablllty
of funds to cover the terms of the lease. Such
lease and rental agreements are valid If such
agreements are made contingent upon the avall-
ability of funds appropriated by the Legislature.
Y&s very truly,
C?i%?--
G&era1 of Texas
Prepared by John Reeves "
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Hawthorne Phillips, Chairman
W. V. Geppert, Co-Chairman
John Banks
Linward Shivers
Alan Minter
Monroe Clayton
STAFF LEGAL ASSISTANT
A. J. Carubbl, Jr.
” 407 -
Untitled Texas Attorney General Opinion
Combined Opinion