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

Criminal District Attorney 

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-Ban Benito Navlgation District of certain 

moneys from time to time to a trust fund for the benefit of 

certain employees of the District. The problem is whether 

the payment contravenes the constitutional provision 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 

ships using the Navigation District's ship channel and other 

facilities. These benefits consist of pension, vacation and 

welfare funds and are part of the overall compensation paid 

to these employees, 

Although not paid to these employees Immediately 

and directly, they are paid to a trust fund for their ultimate 

use and benefit. In our opinion these payments are not a 

gratuity because the employee does not get them unless he 

works D and ha gets them only in the proportion to the number 

of hours which he works. 

Friedman V- American Surety Co. of New York, 151 

S.W.2d 570, 578 (Sup.Ct. 194J.) was a suit challenging the constitutionality of the Texas Unemployment Compensation Act 

(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 times of unemployment should be regarded as a part of their compensation or wages. 
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Honorable F. T. Graham, page 2 (WW-21.5) 

All employees who labor or perform services for 

employers who are covered by this Act labor or 

serve in part for the right to enjoy the benefits of this unemployment fund. So regarded, 

the fund and the benefits to be derived therefrom by unemployed employees cannot be regarded 

as a gratuity within the meaning of Section 51 

of Article III of our State Constitution. To 

the contrary, those who come under its provisions have labored or served for such privilege. 

Byrd vO City of Dallas, 118 Tex. 28, 6 S.W.2d 

738. 

"In the case just cited this Court had before it a statute which authorized a certain 

class of cities to create a pension or aid fund 

for certain of their officers and employees. 

The fund was created in part by payments made 

into the same by the officers and employees to 

be benefited and in part by the City out of its 

own revenues. The plan authorized by the statute contemplated that the officers and employees 

of the City designated should receive their salaries in the usual way, and, in addition thereto, 

should be entitled to participate 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 fund was a part of the compensation paid 

for the services rendered. We think the same 

principle applies here. The right of an employee covered by this Act to participate in the 

fund created thereby is a part of the compensation earned while he is employed.n 

The Friedman case, sunra, involved an unemployment 

fund, The BJ& case, m, involved a pension or aid fund. 

In our opinion the payments involved in these asses are so 

similar to the payment of pension, vacation and welfare benefits under the arrangements outlined In your letter as to 

render these cases fully decisive of your question. Therefore, we~hold that the payment of such funds is not a gratuity. 
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Honorable F. T. Graham, Page 3 (WW-215) 

SUMMARY 

Funds paid by a Navigation District to 

a pension, vacation and welfare trust 

fund for the benefit of employees as a 

part of the compensation paid such employees is not a grant, gratuity or 

donation of public funds within the 

meaning of Sections 44, 51, 52 or 53 

of Article III or Section 3 of Article 

XI of the Constitution of 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