c



### E 

## GENEIRAL

WI& WILSON **AT-X-ORNEYGENERAL**

Honorable H. D. Dodgen Executive Secretary Game and Fish Commission Austin, Texas

Dear Mr. Do&en: Your letter reads: 

### OF EXAS AUSTIN 

### 1% TEXAS

January 18, 

### 1961

Opinion No. 

### ~~-984
Re: Whether a permittee under a Game and Fish Commissionpermit authorizing removal of shell from Galveston Bay is liable to the State for an increase in the price to be paid for shell orderedby the Commission prior to the expiration of the permit.

"EffectiveApril 25, 

### 1954, this office renewed a shellpermit for W. D. Haden Company of Houston to remove shell from Galveston Bay for cormnercial purposes. The permit as originallywritten provided, among other things, that the permittee shall file monthly reports and remit to the Game and Fish Commission

### 7#per cubic yard for all shell removed from the public waters during the month for which the report is made. An endorsementto the permit effective January 1, 

### 1955,

was attached to the permit on December 

### 6,1954.The permit was issued for one year and expired on April 25, 

### 1955.
"On October 1, 

### 1954, the Game and Fish Commissionadopted a resolution increasingthe price to be paid by all shell dredgers from 

### 7#to lO#.per cubicyard effectiveJanuary 1, 

### 1955, and approved by the Governor on November 4, 

### 1954.All shell dredgerswere properly advised on December 

### 6,1954, of the increase in price and all paid it without question exceptW. D. Haden Company which continuedto remit to the',Game

and Fish Complission on the basis of 

### 76per cubicyard. When the Game and Fish Commission requestedpayment for the shell at the rate of lO$!

per cubic yard and W. D. Haden Company refused to pay it, a suitwas filedby W. D. Haden Company in the District Court of Galveston County when cancellationof the permit was threatened. By agreementbetween attxneys,W. D. Haden Company consented to pay Into the registry of the court the sum of 

### 31per cubic yard for all shell produced from January 1, 

### 1955, until the expiration of the permit on 

### April25,1955. The total sum depositedby W. D. Raden Company in the registry of the courtwas 

### $21,053.87.
"In this trial of the case, judgmentwas rendered In favor of the plaintiffby the trial court and was appealed by the state to the Court of Civil Appeals for the 2nd SupremeJudicial District of TexasHonorable H. D. Dodgen, Page 2 

### (~~-984)

where the judgment of the trial courtwas reversed and the case remanded to the courtbelow with a directivethat the suit be dismissed. 

### c303S.W.2d 4431 An appeal to the Supreme Court of Texas was taken by the plaintiffwhere the court upheld the judgment of the Court of CivilAppeals, reversing the judgment of the trial court,and ordered the suit dismissed. The Supreme Court's final judgment ordered the money returned to W. D. Haden Company. 

### [308S.W.2d 8381
"It appears that the paramount questionbefore the court was whether W. D. Haden Company had legislativeauthority to sue the state.and judgmentwas rendered on that issue. The question of whether W. D. Haden Company owes the additional sum of 

### 3&! per cubic yard forshell produced from the public waters from January 1, 

### 1955,

to April 25, 

### 1955, was not determinedby the court. "Your opinion is respectfullyrequested as to whether the sum of 

### $21,053.87 is due the stateby W. D. Haden Company, representing the increase in price of shell from January 1, 

### 1955, to April 25, 1955, and removed under authority of the abovementioned permit." The permit invqlved reads as follows: ' "GAME & FISH COMMISSION.OFTEXAS

Austin, Texas SAND,SHEiLAIiDGRAVELPERMPI

No. 

### 243-A-6
"STATE OF TEXAS County of Travis 1 TO WHOM THIS MAY CONCERN: "PERMISSION is hereby grantedW. D. Haden Company of Houston, Texas, to remove mudshell placed under the management and control of the Game and Fish Commission,as provided inArt. 4051, R.C.S., 1925, as follows: "From an area three (3)miles north and'south and five (5)miles east and west, adjacent to the GalvestonBay Oil Field: "SUBJECTTO THE FOLLOWINGPROVISIONS: "First. That the permittee herein shallmake sworn report not later than the 10th day of each month on all materials removed from theHonorable H. D. Dodgen, Page 3 (~-98’+) public waters during the precedingmonth at the location describedabove, and shallmaintain permanent records of all suchmaterials produced so that such recordsmay be inspectedby a representativeof the Game and Fish Commission at any time. A report each month is requestedwhether any materials are produced or not. "Second. That the permittees shall remit to the Game and Fish Commission 

### 7#.

per cubicyard on all sand and shell and 

### 8#per cubic yard on all gravel removed as above provided during the month for which each report is made. "Third. That the permittee shallnot interferewith any State or Federal inprovements,navigation, fish life, riparian rights or landowners in or along any stream or violate any law or regulation of the Game and Fish Commissionpertaining to the taking of sand, shell and/or gravel. If any shell is to be produced under this permit, it is especially agreed and understood that the permittee shallnot operatewithin 1500 feet of a live oyster reef. "Fourth. Nor shallpermittee dredge any shellnot coveredwith at least two feet of soil silt or mud. Nothing herein shallbe construed to allow dredging in such place or manner so as to damage the property of any riparian owner. "Fifth. That the bond of $5,000.00now on file inthe office of the Game and Fish Commissionwith American General InsuranceCompany as suretyand the permittee herein as principal, conditionedupon the faithful complianceof saidpermitteewith the terms and conditions of this permit, shallbe used to recover any sum or sums of money to the extent of $5,000.00 that may be due the State by virtue of this permit. "Sixth. That should the permittee herein violate any condition of this permit or violate any law or regulationpertaining to the taking of sand, shell and/or gravel, the Game and Fish Commissionmay cancel this permit; otherwise,-it shall expire on the 25th day of April, A.D., 1955. "THIS PERMIT IS NOT EXCLUSIVE - NOT TRANSFERABLE. "Given under my hand and seal of office at Austin, Texas, this the 15th day of April, A.D., 1954.
GAMEAND FISH COMMISSION

BY: H. D. Dodgen Executive Secretary"Honorable A. D. Do&en, Page 4 bw?8'+)

Article 4051, Vernon'sAnnotated Texas Civil Statutes reads in part as follows: "All 1
. .bays within the tidewater limits
. . . together with the marl and sand of commercialvalue, and all the shells, mudshell or gravel of whatsoever kind that may be a . . In or upon the bottoms of any . . 0bay
. a . are hereby placed under the management, control and protection of the Commissioner. None of the marl, gravel, shells,mudshells or sand'included.herein shallbe purchased, taken away or disturbed,except as provided herein,
. . . ." Article 4052,V.A.T.C.S., reads in part as follows: "The Commissioner is hereby investedwith all the power and authority necessary to carry into effect the provisions of this chapter,and shallhave full charge and discretion over all matters pertaining to the sale, the taking, carryingaway or disturbing of all marl, sand, or gravel of commercialvalue, and all gravel and shells or mudshell
. . . and their protection from free use and unlawful disturbing or appropriation of same,with such exceptionsas may be provided herein." Article 4053, V.A.T.C.S., reads in part as follows: "Anyone desiring to purchase any of the marl and sand of commercialvalue and any of the gravel, shells or mudshell 0
. . or otherwise operate in any of the waters or upon any I . .bay

. . . shall first make written application therefor to the Commissioner designatingthe limits of the territory in which suchperson desires to operate. If the Commissioner is satisfiedthat the taking, carryingaway or disturbing of the marl, gravel, sand, shells or mudshell in the designated territorywould not damage or injuriouslyaffect any oysters, oyster beds, fish inhabitingwaters thereof~.
. . and that such operationwould not damage or injuriously affect any island, reef,bar, channel,
. . .used for
. 0
.navigation
. . .he may issue such permit to suchperson after such applicant shallhave compliedwith all requirementsprescribedby said Commissioner. The permit shallauthorize the applicant to take, carry away or otherwise operatewithin the limits of such territory as may be designatedtherein, and for such substanceor purpose only as may be named in the permit and upon the terms and conditions of the permit. No permit shallbe assignable,and a failure or refusal of the holder to complywith the terms and conditionsof such uermit shall operate as an immediatetermination and revocation of all rights conferred therein or claimed thereunder. No specialprivilege or exclusive right shallbe granted to any person, association of persons. corporate or otherwise,to take or carry away any of suchproducts fromHonorable H. D. Dodgen, Page 

### 5 W- 984) any territory or to otherwise operate in or upon any Island,reef, ‘bay,lake, river, creek, or bayou included in this chapter." [mphasis added] Article 4053d,V.A.T.C.S., reads in part as follows: "The Game, Fish and Oyster Commissioner
. . .may sell the marl, gravel, sand, shell or mudshell
. . .upon such terms and conditionsas he may deem proper,but for not less than four ($4) centsper ton, and payment therefor shallbe made to said Commissioner.
. . .II
In 1929 the 41st Legislature abolished the office of Game, Fish and Oyster Commission, and created the Game, Fish and~.0ys~br.Commis;sian, and conferred the powers,fo,rmerly~vested in the single Commissionerupon such six-memberCommission, which act became~

Article 

### g78fof Vernon'sAnnotated Penal Code of,Texas.: ,I~'

In 

### 1951the 52nd Legislatureabolished the six-memberGame, Fish and Oyster Commission, and created the nine-member Game and Fish Commission,and conferred the powers formerlyvested in the six-memberCommission upon the new nine-member Commission,which act becameArticle 

### 978f-3 of Vernon'sAnnotated Penal Code of Texas. A license affecting real property amounts to a mere privilegeand imports no estate or interest'inthe property. 27 Tex.Jur, page 

### 856. The statutesplainly refer to the authorizationto remove the shell as a "permit",and the form of such authorization complieswith the statute in this regard. The courts in Texas frequently refer to the agreement under which the permit is granted as a contract, subject to the special rules governing licenses.
As a rule a license is revocable at the will of the grantor, 27 Tex.Jur. page 

### 860. A licensewhich is of a revocablenature may be modified by the licenser giving timely notice thereof. 

### 53C.J.'S. page 

### 813. Formerly the rule allowing revocationwas appliedvirtually without qualification,but the courts of Texas now recognize four situations in which they will refuse to sanctiona revocation of a licenseby the licenser: (1) where a parole easement,which otherwise would amount to no more than a bare license,has been taken out of the statute of fraudsby part performance; (2) where some considerationhas been given to keep the license alive; 

### (3) where the license is directly connectedwith the grant of an interest in land, the enjoyment of which dependsupon the continued existence of t,helicense;and (4)where the licenseehas been inducedto expand a considerableamount of money or labor in reliance on the subsistenceof his license. 27 Tex.Jur. pages 

### 860-861.
A state has a right to contractthe same as a corporationor individual, so long as authority is grantedby the Legislature. 

### 38Tex.Jur. pages 

### 635-636.Honorable H. D. Dodgen, Page 

### 6 (~-984)

It is not for judicial considerationwhether a contractregular on its face, is beneficial to the state or whether it shouldhave been made. cage 

### 637. 38Tex.Jur.

The questionpresented is whether the Permit grantedby the Came and Fish Commissionmay be modifiedby the licenser, the Came and Fish Commission, by raising the price of shell an additional

### 3#per yard, contrary to the original terms of the Permit, prior to its expirationdate ofApril 

### 25,1955. And this in turn dependsupon whether or not the permit or license is revocable. As we have seen, ordinarilya licensemay be revoked at the will of the licenser, unless it fallswithin one of the exceptions listed above.

In the case of Hall v. Willmering 209 S.W. 

### 226 (Tex.Civ.App.1919writ of error refused),Hall and Willmering had dntered into a contract.wherebv Hall granted to Willmering the exclusive right to enter on Hall's land, and io remove therefrom gravel and sand for a period of three years,Willmering to pay Hall 1Of per yard for sand and gravel taken, to be paid every thirty days. The contract also provided that if Hall should fall to give notice of termination of the contractthirty days before expiration of the three years, then at Wlllmering's option the contractwould exist for another three years. After the contractwas executed,Willmering enteredupon the premises, and stripped off the surface soil in order to be able to take the sand and gravel. When the three-year period expired, Hall failed to give notice, and Willmering continued to take gravel and sand and tendered his monthly payments for the sand taken. Hall brought suit to enjoinWillmering from further hauling sand and gravel from the pit. The trial court gave judgment for the defendant,and plaintiffHall appealed. The Court of CivilAppeals in the Hall case, 209 S.W. 

### 226,said at page 227: "The contract containedno absolute agreement on the part of Willmering to do anything; the agreement to pay for the gravelwhich he might take and to perform the labornecessary to its taking coming into operation only as he might see fit from time to time to exercise the privilege of taking gravel,and being an incidentthereto. It is clear, therefore, that prior to the time that he strippedthe ground preparatory to exercising the privilege the contractwas unilateral, and might have been terminatedby either party, . . . But the contract under consideration is more in the nature of a lease or license to mine or to do similaracts on the premises of the grantor,which may result Y in mutual benefit to both the grantor and the grantee of the right, and there are authorities in this branch of the law which we think are more directly in point, and which will control the decision in this case. A mere license under earlier decisionsmight be revoked at the will of tEe grantor, so that the licenseewas analogous to that of Will.mering in this case in that'it was subject to termination at the will of the grantor of the right or privilege. In many jurisdictions,however, courts ofHonorable H. D. Dodgen, Page 

### 7 (w-984)

eauity exercise of this right of revocation,where on the faith of its grant the grantee thereof had made expenditureson the land for the purpose'

of exercisingthe privilege.
. . . The tendency of the decisions'

of this'state'is'

evidently to follow this generalprinciple of protecting the'licensee under such circumstances.
. . ." The Court in the Hall casewent on to quotewith approval the Supreme Court of Pennsylvania inRerick v* Kern, 14 Serg. & R. 271, in which the latter court said:
"A licensemay become an agreement on valuable consideration; as, where the enjoyment of it must necessarilybe preceded by the expenditure of money; and when the grantee has made improvementsor invested capital in consequenceof it, he has become a purchaser for a valuable consideration. Such grant is direct encouragementto expend money, and it would be against all conscienceto annul it as soon as the benefit expected from the expenditure is beginning to be perceived."
We have no facts submittedto us which would showwhat expendituresof money, if any, the licensee,W. D. Haden Company, has made upon the considerationtbat it had this permit or any annual renewal thereof. But it is inconceivablethat an operation of this type couldbe undertakenwithout a substantialexpenditureof money for barges, dredging equipment, ownership or rental of docks, trucks, etc. It is true that the originalpermit was only for one year, and each renewalthereafter was for a like period time, and that the licenseeundertook this operation fully understanding that the Commissionmight raise the prices at the time of each renewal, or refuse to renew the permit at all. But at least the licenseewas able to measure each expenditure of itsmoney against a definiteterm and a set price for the duration of that term, in making its business calculations. In all good conscience, it would not be equitableand fair for the State of Texas to raise the price of shell,making it applicable to a licenseeprior to the end of the term of the permit granted. See also Risien v. Brown,

### 73Tex.'

### 135,10 S.W. 

### 661 (1889); Markley et al v. Christen et al, 

### 226S.W. 150 (Tex.Civ.App.,192C, dism.)
We hold, therefore, that the permit granted to W. D. Haden Company inApril 1954, to expire onApril 25, 

### 1955, became irrevocableby the Came and Fish Commisk-ion when the licensee enteredupon the operation of dredging for shell, expending its money in so doing. When the license or permit became irrevocable, it was not subject to modification of its provisions during the period of time for which it was granted, such as a raise in prices, to the detriment of the licensee. The permit obviously can be revoked for cause, a number of such causesbeing enumerated in the permit itself,but this is a differentmatter altogether.Honorable H. D. Dodgen, Page 8 W-984) SUMMARY Where a licensee obtained apermit from the Game and Fish Commission to take sand, gravel and shell from the bottom of a bay, which permit had a definite expiration date and a fixed price per cubicyard for all sand, gravel, or shell taken, and thereafter the licensee enteredupon the operation of dredging and taking such materials and expending itsmoney in such operation, suchpermit became irrevocable for the duration of its term, except for cause. Where a license to take sand, gravel and shellbecomes irrevocable, excpet for cause, the Game and Fish Commission cannot raise the price of sand, gravel and shell, and make such increase in price applicable to such licensee contraryto the terms of the permit when granted, until after expir,ation of the currentpermit.

APPROVED: OPINION COMMITTEE W. V. Geppert W. Ray Scruggs Linward Shivers Joe M&asters Leon Pesek REVIEWEDFORTHEA!Fl'ORNEYGENEiUL BY: Leonard Passmore Yours very truly,
WILL WILSON Attorney General of Texas

By; )4LG1 ++- RILEYEUGENEFLEl'CREB Assistant