June 5, 1990
Mr. William D. Taylor Opinion No. JM-1181
Executive Director
Department of Commerce Re: Constitutionality of appro-
P. 0. Box 12728 priations to the Texas Department
Austin, Texas 78711 of Commerce and the Comptroller
of Public Accounts to pay former
employees and contractors of the
Texas Conservation corps I Inc.,
under article III, section 44
of the Texas Constitution
(RQ-1853)
Dear Mr. Taylor:
You ask whether the Texas Constitution makes invalid
P two 1989 related appropriations that authorize payment of
certain unpaid claims against the Texas Conservation Corps,
Inc. In particular you are concerned about the validity 'of
the appropriations under article III, sections 44, 50, and
51 of the Texas Constitution. Since we hold that both
appropriations violate article III, section 44, we do not
address their validity under any other constitutional
provision.
One of the two appropriations is a rider that appro-
priates $150,000 from the General Revenue Fund to the Texas
Department of Commerce [hereinafter the department] to pay
the unpaid wages of former non-executive employees, program
participants, and contract laborers of the Texas Conserva-
tion Corps, Inc. [hereinafter called the TCC]. General
Appropriations Act, Acts 1989, 71st Leg., ch. 1263, art. 1,
at 5166 (Rider 19). That rider limits amounts paid to
contract laborers to no more than $2,500. Id.
The other appropriation authorizes the Comptroller of
Public Accounts to expend $150,000 from the General Revenue
Fund to satisfy approved claims of eligible former vendors
of the TCC. Id. at 5180. The appropriation to the
comptroller also provides that any eligible vendor may be
paid an approved claim to the extent that the claim does not
exceed $2,500. The amount of an approved claim in excess of
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Mr. William D. Taylor - Page 2 (JM-1181)
$2,500 may be submitted to the comptroller for payment in
accordance with section 403.074 of the Government Code
entitled 10Miscellaneous Claims." Finally the appropriation
to the comptroller provides that l'[a]ny balance remaining
after payment of the approved claims in conformance with the
provisions herein may be transrrred to the appropriation
for Miscellaneous Claims."1 -1
In 1986 and 1987 the Texas Department of Community
Affairs entered into contracts with the TCC, a private
nonprofit corporation, to provide job training services in
accordance with section 123 of the federal Job Training
Partnership Act. 29 U.S.C. s 1533 (federal funds authorized
to finance agreements between state agencies, certain
administrative entities and appropriate 'local educational
agencies): see also 29 U.S.C. 55 1501, 1551-52, 1574,
1601-05. The contracts required the TCC to establish a
residential education and training program and provided
federal funds to the TCC to do so. During the period
covered by the contracts the Texas Department of Community
Affairs was authorized by the Texas Job-Training Partnership
Act to implement job-training programs such as the TCC
residential program and to fund eligible job-training
programs with monies received under the federal Job Training
Partnership Act. Acts 1983, 68th Leg., ch. 1024, 5 5(b), at
5451, (prior to amendment by Acts 1987, 70th Leg;, ch. 374,
5 2(b), at 1855, current version at V.T.C.S. art. 4413(5i),
5 5(b)).
1. The 1989 General Appropriations Act contains
separate appropriations to the comptroller for payment of
miscellaneous small claims pursuant to section 403.074 of
the Government Code. Those appropriations total $1,500,000
each for the years ending August 31, 1990, and August 31,
1991. Acts 1989, 71st Leg., ch. 1263, art. 1, at 5180.
Since we hold the $1,500,000 appropriations for the payment
of miscellaneous claims unconstitutional to the extent that
they, in conjunction with the $150,000 appropriation to the
comptroller, authorize payment of claims in violation of
article III, section 44, of the constitution, we do not
address the question whether the comptroller may pay under
the separate $1,500,000 appropriations all unpaid amounts of
eligible vendors under and over $2,500 whether they are
approved or not.
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Mr. William D. Taylor - Page 3 (JM-1181)
.
The Texas Department of Community Affairs in October
1987 decided to terminate its support for TCC, effective
December 1987, amid charges of TCC mismanagement and
embezzlement. The state paid the contractor the money due
it. The responsibilities of the Texas Department of
Community Affairs under the Texas Job-Training Partnership
Act were thereafter transferred in 1988 to,the department.
Acts 1987, 70th Leg., ch. 374, S 2, at 1855; j& S 13, at
1873-74; see also Gov't Code § 481.023(c). Records avail-
able to the department show that the TCC did not pay
$150,500 in compensation to approximately 150 former
employees, participants, and contract laborers who had
performed services under the TCC's job training program and
$215,000 to various vendors who had supplied the TCC program
with goods and services. The legislature has now appro-
priated money to give these individuals the compensation
that they did not receive from the TCC.
Article III, section 44, of the Texas Constitution
prohibits the legislature from making grants of money out of
the State Treasury, by appropriation or otherwise, "to any
individual, on a claim, real or pretended, when the same
shall not, have been provided for by pre-existing 1aw.Y
Texas courts have consistently interpreted this provision to
mean that the legislature cannot appropriate funds out of
the State Treasury to any .individual or private corporation
to satisfy a claim unless there is already in force at the
time of the appropriation some valid law under which the
state courts would hold the state liable for the claim in
the event the state waives its immunity against suit. Texas
Public Bldcf. Auth. V. Mattox, 686 S.W.2d 924, 929 (Tex.
1985); Fort Worth Cavalrv Club v. Sheovard, 83 S.W.2d 660,
663 (Tex. 1935); Austin Nat'1 Bank v. SheDDard, 71 S.W.2d
242, 245 (Tex. 1934). Thus the claims to be satisfied by
the 1989 appropriations must be legal and valid obligations
of the state enforceable in the courts of this state.
Attorney General Opinions JM-970 (1988); JM-17 (1983).
The requirement that a claim be supported by "pre-
existing law" may be satisfied by reference either to a
valid state statute or to a provision of the common law that
is not inconsistent with the Texas Constitution or Texas
statutes. Texas Public Bids. Auth. v. Mattox, 686 S.W.Zd at
929 (Tex. 1985); Austin Nat'1 Bank v. Sheooard, 71 S.W.2d at
245-46 (Tex. 1934); State v. Steck, 236 S.W.Zd 866, 869
(Tex. Civ. App. - Austin 1951, writ ref'd). A moral
obligation to reimburse a party for services or goods
rendered the state will not by itself satisfy the
"pre-existing law" requirement of article III, section 44.
P
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Mr. William D. Taylor - Page 4 (JM-1181)
.
w Austin Nat'1 Bank v. Sheooard, 71 S.W.2d at 245 (Tex.
1934)(limiting Kiloatrick v. Comoensation Claim Bd., 259
S.W. 164, 167 (Tex. Civ. App. - El Paso 1924, no writ), to
the extent it suggests otherwise); State v. Perlstein, 79
S.W.2d 143, 147 (Tex. Civ. App. - Austin 1934, writ dism'd);
Attorney General Letter Advisory No. 107 (1975). Nor will
reimbursement by the state for services or goods be held
valid under article III, section 44, on the basis of the
common law right to quasi- contractual recovery -- the right
to recover the reasonable value of services or goods
provided -- absent either statutory or constitutional
authority for the state to contract for the services or
goods and actions by the state's agents consistent with
their contractual authority including all limitations on
such authority. State v. Raaland Clinic-Hosoital, 159
S.W.2d 105 (Tex. 1942) (no right to recover for medical
services provided absent express or implied statutory
authority for state agent to make contract binding on
state): State v. Steck, 236 S.W.2d at 868-69 (no right to
recover reasonable value for goods provided in a manner
inconsistent with either the state constitution or a state
statute); State v. Haldeman, 163 S.W. 1020 (Tex. Civ. App. -
Austin 1913, writ .ref'd) (no right to recover payment in
excess of amount authorized by statute): accord Susman,
Fiscal and Constitutional Limitations, 44 Tex. L. Rev. 106,
132-35 (1965).
Under the facts presented to us, we do not find a pre-
existing statute that would authorize the state to incur
liabiiity for the third party claims covered by the 1989
appropriations to the department and the Comptroller of
Public Accounts. Nor have you referred us to such a pre-
existing statute. Although the 1986 and 1987 contracts are
supported by the authorization in the Texas Job-Training
Partnership Act for the Texas Department of Community
Affairs to implement and fund job-training programs pursuant
to the federal legislation, the Texas Job-Training Partner-
ship Act only authorizes the earlier appropriation by the
state of federal monies to fund the contracts with the TCC.
Nothing in that act either expressly or by necessary
implication authorizes the Texas Department of Community
Affairs to reimburse the third party claimants for services
and goods provided to the TCC. See, e.a., V.T.C.S. art.
4413(52), 55 7(a) (criteria shall be prescribed for selec-
tion of local entities to administer programs), QA(a)
(authority to contract with private nonprofit corporations).
We also find no express or implied authority for the Texas
Department of Community Affairs to incur liability for the
third party claims in the statute creating the Department of
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Mr. William D. Taylor - Page 5 (JM-1181)
Community Affairs and listing its rights and duties.
V.T.C.S. art. 4413(201) (emphasis is on assistance to local
governments).2
Under the facts presented to us, we do not find a pre-
existing common-law right that is consistent with the narrow
state statutes applicable to the Texas Department of
Community Affairs and its contracts with the TCC and that
would therefore impose liability on the Texas Department of
Community Affairs and thus the state for the claims in issue
here. For instance, we do not find in the statutes any
express or implied authority to apply the common-law of
third party beneficiaries to the facts of this case. Nor
have you referred us to a common-law right that would be
consistent with the applicable state statutes and would thus
impose liability on the state in this case. See, Attorney
General Opinion JM-618 (1987) (although existence of common-
law right ultimately dependent upon factual determinations
beyond the opinion process, availability of right under
article III, section 44 is issue capable of determination as
part of the opinion process).
Absent either a pre-existing .statute or a common-law
P
right consistent with the applicable state statutes, we' are
constrained to hold the 1989 appropriation to the department
and the 1989 appropriation to the Comptroller of Public
Accounts unconstitutional under article III, section 44. To
do otherwise could result in unlimited state liability to
third party claimants in the context of state programs
funded with federal or state funds.
2. Furthermore, no provision of the 1986 or 1987
contract indicates that the Texas Department of Community
Affairs had an express contractual or other legal obligation
to the affected third party claimants. In fact both the
1986 and 1987 contracts provide that the Texas Department of
Community Affairs was not liable for any third party claims
that might be asserted in connection with the services to be
performed by the TCC under the contracts. Both contracts
also provide that the Texas Department of Community Affairs
was not in any way liable to the TCC's subcontractors.
Finally, neither contract nor any other facts presented to
us reveal any contractual or regulatory control exerted by
the Texas Department of Community Affairs over the TCC that
is unusual in the context of state programs funded by
federal grants.
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Mr. William D. Taylor - Page 6 (JM-1181)
We also conclude payment of the third party claims
pursuant to the 1989 appropriations for payment of mis-
cellaneous claims under section 403.074 of the Government
Code would violate article III, section 44, of the Texas
Constitution. Section 403.074 authorizes the comptroller
to pay from funds appropriated for that purpose certain
miscellaneous claims for which appropriations do not
otherwise exist. The section prohibits the preparation of a
warrant for payment of a claim unless the claim has been
"verified by the attorney general as a legally enforceable
obligation of the state." Gov't Code § 403.074(b)(2).
Since we hold in this opinion that there is no "pre-
existing law** to justify payment of the third party claims
and thus that such claims are not legally enforceable
obligations against the state, payment of those claims under
any 1989 appropriation, including the 1989 appropriations
for miscellaneous claims, would violate article III, section
44. Thus we hold the 1989 appropriations for payment of
miscellaneous claims invalid to the extent that they in
conjunction with the 1989 appropriation for payment of TCC
vendor claims authorize payment of the third party claims in
issue here.
.SUMMARY
The claims of former employees and con-
tractors of the Texas Conservation Corps,
Inc., are not legally enforceable obligations
against the state. Thus the 1989 appropria-
tions by the legislature to pay those claims
violate the pre-existing law requirement of
article III, section 44, of the Texas Consti-
tution and are unconstitutional.
JIM MATTOX
Attorney General of Texas
WARY KELLER
First Assistant Attorney General
LOU MCCREARY
Executive Assistant Attorney General
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Mr. William D. Taylor - Page 7 (JM-1181)
JUDGE ZOLLJE STEAK-Y
Special Assistant Attorney General
RBNEA HICKS
Special Assistant Attorney General
RICK GILPIN
Chairman, opinion Committee
Prepared by Celeste A. Baker
Assistant Attorney General
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