Honorable F. T. Graham Opinion No. W-215.

CriminalDistrictAttorney Cameron County Re: Legality of payment of Brownsville,Texas pension, vacation end welfare benefits by navigation district to trust fund for benefit of emDear Mr. Graham; plogees.

In your letter of July 18, 1957,you request an opinion of this office aoncerning the legality of the payment by the Port Isabel-BanBenito Navlgation District of certain moneys from time to time to a trust fund for the benefit of certain employeesof the District. The problem is whether thepayment contravenes the constitutionalprovision contained in Sections 4, 51, 52, and 53 of Article III of the Constitution of Texas against gifts, grants, and gratuities.

From your letter it appears that these employees are engaged in the loading and unloading of cargo to and from shipsusing the Navigation District's ship channel and other facilities. These benefits consist of pension, vacation and welfare funds and are part of the overall compensationpaid to these employees,

Although not paid to these employees Immediately and directly, theyare paid to a trust fund for their ultimate use and benefit. In our opinion thesepayments are not a gratuitybecause the employee does not get them unlesshe worksD andha gets them only in theproportion to the number of hours which he works.

FriedmanV- American Surety Co. of New York, 151 S.W.2d 570, 578 (Sup.Ct. 194J.) was a suit challenging the constitutionalityof the Texas Unemployment CompensationAct (Art, 5121b,V.C.S.). The Supreme Court said:

"It is true that the employers alone directly create the unemployment fund,but it is created for the benefit of their employeea. Therefore, the right of such employees to enjoy or participate in the fund in timesof unemployment shouldbe regarded as a part of their compensationor wages._ -

--. _

HonorableF. T. Graham,page 2 (WW-21.5)

All employeeswho labor or perform services for employerswho are coveredby this Act labor or serve in part for the right to enjoy thebenefits of this unemployment fund. So regarded, the fund and the benefits to be derived therefrom by unemployed employees cannotbe regarded as a gratuitywithin themeaning of Section 51 of Article III of our State Constitution. To the contrary, thosewho come under its provisionshave labored or served for suchprivilege. Byrd vO City of Dallas, 118 Tex. 28, 6 S.W.2d 738.
"In the case just cited this Courthad before it a statutewhich authorized a certain class of cities to create a pension or aid fund for certainof their officers and employees. The fundwas created in part by paymentsmade into the sameby the officers and employees to be benefited and in part by the City out of its own revenues. The plan authorizedby the statute contemplated that the officers and employees of the City designated should receive their salaries in theusual way, and, in addition thereto, shouldbe entitled toparticipate in the pension fund above described. Itwasheld that the statute did not create or attempt to create a gratuity; but that the right to participate in the pension fundwas a part of the compensationpaid for the servicesrendered. We think the same principle applieshere. The right of an employee coveredby thisAct to participate in the fund created thereby is a part of the compensation earnedwhile he is employed.n The Friedman case, sunra, involved an unemployment fund, The BJ& case,m, involved apension or aid fund. In our opinion thepayments involved in these asses are so similar to the payment of pension,vacation andwelfare benefits under the arrangementsoutlined In your letter as to render these cases fully decisive of your question. Therefore,we~hold that the payment of such funds isnot a gratuity.- .

_ .--

Honorable F. T. Graham,Page 3 (WW-215)

SUMMARY

Fundspaid by a Navigation District to a pension, vacation and welfare trust fund for the benefit of employees as a part of the compensationpaid such employees is not a grant, gratuity or donation of public fundswithin the meaning of Sections 44, 51, 52 or 53 of Article III or Section 3 of Article XI of the Constitutionof Texas.

Very truly yours, WILL WILSON Attorney General of Texas

RRR:wb
APPROVED:
OPINION COMMITTEE
H. Grady Chandler, Chairman W. V. Geppert B. H. Timmins, Jr. Wallace Finfrock Assistant

REVIEWED FOR THE ATTORNEY GENERAL BY: Geo. P. Blackburn