# THE AITCBRNEB GENE&& OF-XAS
AURTIN. T*rxlas 78711

August 3, 1973

The Honorable Dr. J. W. Edgar Commissioner of Education Texas Education Agency 201 E. Eleventh Street Austin, Texas 78701

Dear Dr. Edgar: Opinion No. H- 79
Re: May the State Textbook

Committee recommend and the State Board of Education adopt textbooks containing materials cooperatively developed by an independent laboratory but financed in part by the State, onwhich I the State will realize royalties7
Information submitted in connection with **your** opinion request reflects that acontract was executed between the Texas Education Agency and Southwest Education Development Laboratory, a non-profit organization, for the development~of certain educational programs. Funds were made available under 20 U.S.C.A. 241e, which authorizes grants to State educational agencies for educational programs andprojects reaching migratory children. All funds utilized were originally Federal grant funds, though aportion was channeled through the State Treasury.
The research was satisfactorily conducted and the materials were developed to the satisfaction ofthe Texas Education Agency, the State thereby receiving the principal things ithad bargained for. The contract also.contemplated, but did not require, that the materials developed would be subsequently published and marketed commercially. Under Federal Copyright Guidelines, U.S.0. E. , 35 F. R. 7317, royalties on materials published in *’ connection with aproject financed by such Federal grants are to be distributed to the co-sponsors inproportion to the co-sponsors’ financial contribution to the:project. A co-sponsor can reject the royalty payments. The publisher under the Guidelines may obtain a copyright onthe published material for afive year period. During that time, the publisher’ alone can utilize the materials.

p. 357. .

The Honorable Dr. J. W. Edgar, page 2 (H-79)

The laboratory which developed the materials under the TEA contract solicited bids from over 100publishers for the publication ofthese textbook materials; however, only one bid was received, and it came from a wholly-owned, non-profit subsidiary ofthe laboratory, The bid contained aproposal that any royalties paid be divided on apro-rata basis among the entities involved inthe transaction, including the.‘Texas Education Agency, The laboratory contracted with the bidder to publish the mater ial.
The Texas Education Agency did notjoin inthe contract with the pub- : lisher, nor has ityet either agreed or refused to participate in royalties which might be,realieed from the sale ofthe published materials inthis : 1or other state:s. Since the publisher is the only one under the copyright ” that may utiliie the materials developed, unless the publisher is allowed to compete for atextbook contract, the State of Texas will have no opportunity.to utilize the materials itwas instrumental in developing.
Your questions are:

‘“(1) Legally,., may the State Textbook ,Committee

,. recommend for adoption and the State Board of Education, ofthis state adopt ,(for multiple textbook list purposes) textbooks submitted onbid by apublisher, which contain materials cooperstively.developed with an indepe~ndentlaboratory, financed inpart,from Central Education Agency funds and the State (agency) to realize pro-rata royalties on,all sales thereof.

‘I

“(2) Would foregoing royalties, provided permissible, alter the answer ,to question (l)? ‘I’

-. Your questions can beganswered only inthe context of “public policy. ‘I There is no statute which speaks specifically to,the problem, but several sections of the Texas,Education Code bear on it., Subchapter B, Chapter 12, Title 2, Texas Education Code, V. T. C. S., $12.11(e) places a duty onthe State Textbook Committee to recommend to the Commissioner of Education a:complete.list of:textbooks which itapproves for .adoption. Textbook contracts are to be competitively’bid,except those concerning textbooks for the blind andvisually handicapped and for kindergarten purposes, which may be let without bidding (5$12.03 and 12.04). Section 12.20 requires contractor affidavits negating improper interests on the part of Textbook Committee members or Board members.
p. 358The Honorable J. WI Edgar, 

### Page 3 (H-79)

The actions and contracts ofthe State Board of Education, aState agency, should not only be inharmony with the laws and Constitution ofthe State of Texas, but should also-be consistent with the “public policy” ofthe State;
Contracts that interfere with or deetroy the freedom of discretion that is required ofpublic officers inthe discharge oftheir,official,duties are impediments to the proper adminietration of government. Contracts in their nature calculated to influenc,e the,action of.,public officers and the effect ofwhich is to influence them one way or another, 

### are against public policy. Meyers v. Walker,’ 276 S.W.. 305 (Tex. Civ. App., East., 1925, nowrit); 13Tex. Jur. 2d, Contra&s, §183. Meyers v, Walkeri 

### supra, involved anticipated bids for city paving contracts. Severai ofthe bidders, prior to the contract award, agreed among themselves andwith the Mayor and City Commissioners that the successful bidder would bear the cost of several trips todistant cities made by the officials to inspect different types of paving. Such ,trips were made and thensuccessful bidder paid the expense. A taxpayer brought suit to enjoin the sale ofthe paving bonds on grounds that the re.sulting contract was illegal, The Court held the contract void, saying (at p. 307):

“This trip of inspection was made, no doubt, with sincerest purpose and no intention ofwrong, but the precedent is dangerous

. . . . The greatest danger in approving such practice is that one favor would lead to another, and loans, presents and like innocent gifts might lead to a rivalry inoffers which **would** destroy. competition in such matters and finally bring a season of corruption.. ”
We are ofthe’opinion that this case, too, could establish adangerous precedent Ihe object of our textbook laws is to secure for the children of Texas the finest materials that can be obtained at reasonable cost tothe appropriate school fund.. Decisions inthat area ought not to be influenced by considerations of possible loss ofprofit to the State generally, or to some other fund because ofthe selection made. Were itotherwise, prospectiv.e

‘bidders might concentrate upon supplying such “fringe benefits” rather than .uponproducing the best and most economical textbooks possible.

p. 359The Honorable Dr. J. W. Edgar, page 4 (H-79)

Inour opinion, inorder that it might retain freedom to select the best materials for the use of Texas school children, the Texas Board ofEducation must decline to participate with private interests inthe continuing royalties possibly to be realized from the sale ofthe materials developed. There is really no other choice, because ifit retained an interest in such royalties, then itcould not legitimately permit the publisher to bid for a:c~ontract. If it did notpermit the publisher to bid, itwould (possibly) prevent the selection ofthe best materials available. Thus, any contractual provision purportedly to allow the Texas Education Agency toparticipate with private interests inthe royalties realized from publication ofthe materials would be void. See Waterbury v. City of Laredo, 5S.W; 81(Tex. 1887).
What we have said ~&es not restrict the ability ofthe.State Board of Education to utilize text materials prepared, developed and published by State agencies which do not occupy the pdsition of~private contractors. Nor would lump-sum settlement of accounts with private contractor8 prior to soliciting bids necessarily be prohibited. Public policy does not discourage economy or thrift, or the prudent use of available resources, but itdoes condemn arrangements which tend to subvert the meritorious selection oftextbooks.
To your questions, then, we reply that inour opinion the State Textbook Committee may not recommend for adoption, nor may the State Board of,‘I,~~ Education adopt, textbooks upon which the State is to realize pro-rata royalties from the private publishers thereof, butwhen the State is not participating with private interests inthe royalties from atextbook, the textbook may be properly recommended and adopted though it contains materials cooperatively developed with an independent laboratory, financed inpart from Central Educational Agency funds.
Inaddition tothe authorities cited above, see Grayson County v. Harrell, 202 S.W. 160 (Tex. Civ.App., Ama., 1918, writ ref’d. ); Uvalde Construction Co. v. Shannon, 165 S.W. 2d 512(Tex. Civ.App., East., 1942, nowrit); Bryan v. Texas State Board of Education, 163 S.W. 2d 837 (Tex. Civ. App., El Paso, 1942, nowrit); 13Texi Jur. 2d, Contracts, $190; 17Am. Jur. 2d, Contracts, 174 et seq. ; Goodier v. Hamilton, 19P. 2d~392 (Wash. 1933); Dodson v. McCurnin. 160 N.~W. 927 (Iowa 1917).

p. 360The Honorable Dr. J. W. Edgar, page 5 (H-79)

SUMMARY
The State Textbook Committee may not recommend for adoption, nor may the State Board of Education adopt, textbooks upon which the State is to realize pro-rata royalties from the private publishers thereof, butwhen the State is not participating with private interests inthe royalties from atextbook, the textbook may be properly recommended and adopted though it contains materials cooperatively developed with an independent laboratory, financed inpart from Central Educational Agency funds. Very truly yours,

DAVID M. KENDALL, Chairman Opinion Committee

p. 361