June 13, 

### 1967

HonorableRobert 5. Calvert Comptroller of PublicAccounts Austin,Texas

Dear Mr. Calvert: OpinionNo. M-89

Re: Construction of Article 666b,Vernon's Civil Statutes, as amendedby Senate Bill 

### 504,Acts of the 60th Legislature,relating to lease contracts entered Intoby the State.
Your request 

### for an opinion on the above subjectmatter asks the followingquestioner

"(1) Can I legally sign a contract for a period of time extendingbeyond the explratlon date of the appropriation for rent becoming available on September 1, 1967,which would be August 

### 31, 19682
"(2) If you hold that a contract can be made extendingbeyond August 31, 1968, must the entire amount of the contractbe paid out of the appropriationsavailable for the fiscal year beglnnln

t September 1, 1967 and ending August 

### 31, 19 8%'"
Article 

### 666b,Vernon's Civil Statutes, as amended by SenateBill 504, 

### Acts of the 60th Legislature,Regular Session, 1967, provides In part:

"Section 4. Hereafter all departmentsand 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 Itwill be used and the need therefor.
'Section2. The StateBoard of Control, upon receipt of such request, and if themoney has been made available to pay the rental thereon, and If, In the discretion of the Board such space Isneeded, shall forthwithadvertise In a newspaper, which has been regularlypublished and circulated In the city, or town, where such rental space is sought, forbids on such rental space, for the uses lnd;;Fted and for a period of not to exceed four years. such leases shallbe contingentupon the avallablrlty of funds to cover the terms of th 1 It I ther provided thatmonthly rental:my","% paid tnfuradvancewhen required by the lease agreementand mutually agreedupon by the lessor and the lessee. After suchbids have been received by the State Board of Control at Its principal office In Austin, Texas, and publicly opened, the award for such rental~contractwill bemade to the lowest and best bidder, and upon such other terms asmay be agreed upon. The terms of the contract, together with the notice of the award of the State Board of Controlwill be submitted to the Attorney General of Texas, who will cause to be prepared and executed In accordancewith the terms of the agreement, such contract In quadrupllcate;one of which will be kept by each party thereto, one by the State Board of Control, and onebv the Attorney General of Texas. The parties to such contractwill be the department or agency of the governmentusing the space as lessee and th t t1 spaceas lessor." (Rmphas?sP%d~dr~n' ng th
e

Pursuant to the above quotedprovisions the State Board of Controlupon receipt of a request for rental spaceby a State agency will award rental contracts to the successfulbidder for
a period notto exceed four years. One of the provisionswhich
we ~111 state In the written contract formwill be as follows:

"Thiscontract and lease agreement Ismade and entered Into In accordancewith the provlslons of Senate Bill 504, Acts of the 60th Legislature, Regular Session, 1967, amendingArticle 666b, Vernon's Civil Statutes,and Ismade contingent upon the avallablllty of funds appropriatedby the Legislature to cover the term of the lease.",

Hon. Robert S. Calvert,page 

### 3 (M-89)

Thus under the terms and conditionsof the contract awarded by the Board of Control pursuant to the provisions of Article 

### 666b,Vernon's Civil Statutes, the contractdoes not obligate the State beyond the avallablllty of funds appropriated by the Legislature. Accordingly, such contractwill not create a debt, Cfty of BIR Spring v. Board of Control, 404 S.W.2d 

### 810, (Tex.Sup.mb6). In that case an attackwas made on the viilldlty of a contract for a subply of water to the State because the term of the contractwas beyond current appropriations. In rejecting this contention the Supreme Court stated:

"The contention that the purchase contract was Invalidbecause there then existed no leglslatlve appropriation to pay for the water to be furnished in the future Is answeredby 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 Commissionpurchasing 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-yearperiod
was invalidbecause It was for longer than the two-year period of legislativeappropriationsand created a debt which could not be paid for out of
reserves for the biennium fnwhich created, This Court said:

UOThlscontract obligates the state to lntraduce into and use relator'sbooks In the public free schools for a period of five years. It obSfgates 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 asmay be needed. Payment ,'forthem 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 somany as are needed by the schools of the state. Liability Is fixed only for such amounts as are requisitionedby the trustees of the schools, The number of books purchased for any year and the amount ofmoney applied thereto Is whollywithin the control of the schoolauthorltfes.
'#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 contractprovide that no debt Is created. The obligationto pay arises onlyupon the purchase and delivery of books for the year when need.ed, and according to the purchase. The books so furnished and so purchasedduring any year do not make a charge on the future resources of theism, state,but are paid for each year as the purchases are'

made.'
'ThisCourt 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-termwater purchase contractwas attacked: 'Themaking of a contract 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 Controlwith the City of Big Spring ia a valid contragt and Is not subject to the attackmade on It;

Under the contract Involved In Clty,of Big Spring v. Board of Control, supra, the city agreed to furnishwater at a Id t .' long as the State of Texas shall In rna%aTi >dazperate saidhospital on said site.' to Big Spring StateHospital.)

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 Intopursuant 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 obligationcreated b th II f the proposed leaseAndy rental agreementwill t~rmlEatse?p% itie expiration of exlstlng appropriationsfor rent unless other appropriations for rent aremade availableprior to such termination. Therefore, no obligationexistsbeyong current revenues and such a lease and rental agreementwouldbe valid.

You are therefore advised that youmay legally sign a lease ,andrental contract awarded by the Board of Controlpursuant 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 leaseand rental agreement that the lease and rental aff;;ment Ismade contingentupon the avallabllltyof appropriated

In answer4o,.ys:+z? secondquestion, If a lease and rental contract Is entered Intopursuant to the provisions of Article 

### 666b,Vernon's,Clvll Statutes, for a period not to exceed four years,which period extendsbeyong August 

### 31, 1968,and such coontract Ismade contingentupon the avallablllty of funds appropriatedby the Legislature, the entire amount of the contract need not be paid out of appropriationsavailable for the fiscal year ending August 

### 31, 1968,but may be paid In accordancewith the terms and conditionsof the lease and rental contract out of monies thereaftermade available from appropriationsby the Leglslature.

SUMMARY

Article 

### 666b,Vernon's Civil Statutes, authorizes the execution of lease and rental agreements on behalf of State agencies for a period not to exceed four years and provides that such leases shall be contingentupon the avallablllty of funds to cover the terms of the lease. Such lease and rental agreements are valid If such agreements are made contingentupon the avallability of funds appropriatedby the Legislature.

Y&s very truly,

C?i%?-- G&era1 of Texas Preparedby John Reeves " AssistantAttorney 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 -