June 22,200O

The Honorable Bill Ratliff Chair, Senate Finance Committee Texas State Senate P.O. Box 12068 Austin, Texas 78711 Opinion No. JC-0237

Re: Whether an oyster-bed lease authorized by chapter 76 of the Parks and Wildlife Code is a perpetual lease or an annual lease, and related questions (RQ-0163-JC)

Dear Senator Ratliff:

You ask anumber ofquestions regarding oyster-bed leases under chapter 76ofthe Parks and Wildlife Code. Because you do not ask about any particular lease or situation, we answer your questions in genera1 terms and only with reference to chapter 76. We conclude that a chapter 76 oyster-bed lease is aperiodic, year-to-year lease that may be terminated atthe end ofany lease year by giving reasonable notice ofthe termination; itisnot aperpetual lease. We also conclude that an oyster-bed leaseholder is authorized to sell or convey the oyster-bed lease, and that the lease does not expire when the leaseholder dies. Additionally, chapter 76 does not prohibit afamily member
or family business partner from acting as an agent for other leaseholders; rather it proscribes the “control” of more than 100 acres of submerged land by the same person. No person may exercise power or authority over more than 100 acres ofsubmerged land pursuant to one ormore oyster-bed leases. Finally, we conclude that control ofmore than 100 acres of land covered by water pursuant to another person’s oyster-bed lease isnot a“lease-breaking condition” that allows the state to cancel the lease by which such control is exercised.

Your first series of questions pertains to the terms and conditions of an oyster-bed lease:

In a lease between the state and an individual, does the absence ofastated term ofthe lease grant that leasehold inperpetuity,
or does a lessee’s payment of annual rent on leased lands render the lease an annual one? Ifthe state, at some point in the future, revokes
or renegotiates terms of these leases, will it owe compensation for lost property rights to these leaseholders? Ifthe leasehold is indeed granted inperpetuity, does the leaseholder have an unlimited right to sell or convey the lease? Does the lease expire when the leaseholder dies, or can itbe conveyed to heirs?The Honorable Bill Ratliff - Page 2 (JC-0237)

Letter from Honorable Bill Ratliff, Chairman, Senate Finance Committee, Texas State Senate, tothe Honorable John Comyn, Texas Attorney General, at I (Dec. 15, 1999) (on file with Opinion Committee) [hereinafter “Request Letter”].

Before addressing your specific questions in detail, we review the statutes regarding oysterbed leases. All beds and bottoms and the products ofthe beds and bottoms ofbays and inlets inthis state and that part of the Gulf ofMexico within thejurisdiction of the state are state property. See TEX.PARKS& WILD.CODEANN.4 1.01l(c) (Vernon 1991). The statemaypermit useofthe waters and the bottoms and taking ofproducts therefrom. See id. The Parks and Wildlife Department (the “Department”), a state agency, is directed to regulate the taking and conservation of all forms of marine life and shells, and to administer the laws relating to fish, oysters, and marine life in accordance with the Parks and Wildlife Code (the “Code”). Id. 5s 1.01l(d), 11.001, 12.001(a); see also 31 TEX.ADMIN.CODERS.58 (1999) (Oyster and Shrimp). Chapter 76 of the Code deals with oyster-bed leases and isthe codification ofvarious statutes enacted in 1919 and earlier. See Act of July21,1919,36thLeg.,2dC.S.,ch.73, 1919Tex.Gen.Laws191;ActofMay30,1975,64thLeg., RX, ch. 545, subtit. D, 1975 Tex. Gen. Laws 1405,1568. Under chapter 76, an oyster bed orreef, other than anatural oyster bed, is subject to “location” by the Department. See TEX.PARKS&WILD. CODEANN. 5 76.003 (Vernon 1991); see also id. $5 76.001(“A natural oyster bed exists when at least five barrels of oysters are found within 2,500 square feet of any position on areef or bed.“), 76.004(c) (natural oyster bed, bay shore area within 100 yards of shore, area subject to riparian rights, and area already under certification aslocation arenot subject tolocation). Any United States citizen or domestic corporation may apply for acertificate authorizing the applicant toplant oysters and make aprivate oyster bed at adescribed location. See id. 5 76.006(a), (b). If the location is subject to certification, see id. 576.009, the Department must issue a certificate that describes the location by metes and bounds and with reference to compass points and natural objects, see id. 576.012.
Chapter 76 provides little guidance as to the nature, terms, or conditions of an oyster-bed location certification. Only section 76.017 deals to alimited extent with the terms and conditions of an oyster-bed location certification, referring to it as a “lease” and providing that:

(a) No rental fee is owed on any location when oysters are not sold ormarketed from the location for aperiod of five years after the date of the establishment of the location.
(b) When oysters are sold or marketed from the location and thereafter, the holder ofthe certificate shall pay to the department $3 per acre oflocation per year. In lieu ofthat payment, the commission may set the required payment under this section in agreater amount.
(c) Rental fees are due annually by March 1.
(d) The failure to pay any rental when due terminates the lease.The Honorable Bill Ratliff - Page 3 (JC-0237)

Id. 5 76.017 (emphasis added); see also 31 TEX. ADMIN.CODE5 58.30 (1999) (Private Oyster Leases). While section 76.017(b) allows the Department to set ahigher rental than $3 per acre per year, the Department has not done so. See 31 TEX.ADMIN.CODE5 58,30(d)(5)(B) (1999). The Department’s rules track the statutory rental provisions with one exception. Section 58,30(d)(5)(E) ofthe Department rules provides that “[ilfoysters from the lease arenot sold ormarketed within five years from the date of establishment ofthe lease, the lease isvoid.” Id. 558,30(d)(5)(E). Section 76.017 does not specifically state the type of leasehold interest created by an oyster-bed lease, i.e., whether itis annual orperpetual. Moreover, we have found no Texas cases construing achapter 76 oyster-bed lease.

Based on the limited provisions of section 76.017 of the Code, we conclude that an oysterbed lease authorized under chapter 76 is aperiodic, year-to-year lease that is terminable atthe end of any lease year with reasonable notice. At common law, there are four kinds of tenancies, classified as follows: (I) tenancy for adefinite term orterm for years; (2) periodic tenancy, as from year-to-year or month-to-month; (3) tenancy-at-will; and (4) tenancy at sufferance. See generally 49 TEX.JUR. 30 Landlord and Tenant $5 24-27 (1986); RESTATEMENT(SECOND)OFPROPERTY $5 I.4, I.5, 1.6 (1977). The classification is important because it determines the incidences of a tenancy. See generally 49 TEX.JUR.3DLandlord and Tenant $5 24-27 (1986); RESTATEMENT (SECOND)OFPROPERTY$5 1.4,1.5,1.6 (1977). To classify the oyster-bed lease, we look atits terms under section 76.017. No rent is required for a five-year period ifno oysters are sold or marketed from that location; and the lease terminates at the end of that period if no oysters are sold or marketed. See TEX.PARKS&WILD.CODEANN.876.017(a), (b) (Vernon 1991); 31TEX.ADMIN. CODE$ 58,30(d)(5)(E) (1999). As soon as oysters are sold and marketed, a leaseholder must pay annual rent by March 1,even during the initial five-year period; otherwise the lease terminates. See TEX. PARKS& WILD. CODEANN. $ 76.017(c), (d) (Vemon 1991). Once oysters are sold and marketed, section 76.017 thus provides forperiodic rent and termination ofthe lease ifthe rental is not paid by March 1,but itdoes not provide for an absolute lease termination date orthe number of annual periods for which the lease may be held. The duration ofthe lease is uncertain. A lease for
an uncertain duration that requires periodic rent creates a periodic tenancy. See Panola County Appraisal Review Bd. v.Pepper, 936 S.W.2d IO, 12(Tex. App.-Texarkana 1996, nowrit) (“Periodic tenancies arethose where the agreement provides no fixed term, but isforperiod toperiod atthe will of the lessor or lessee.“); RESTATEMENT (SECOND)OFPROPERTY$j1.5 cmt. d (1977) (parties may expressly provide for periodic tenancy, agreement may be apparent from circumstances, or where
no duration is stated but periodic rent is reserved, periodic tenancy ispresumed).

Our construction of a chapter 76 oyster-bed lease as a periodic, year-to-year lease is supported by Texas case law dealing with leases generally. By way of background, an at-will tenancy is one that is terminable atthe will ofeither party to the lease at any time, see Holcombe v. Lorino, 79 S.W.2d 307, 310 (Tex. 1935); RESTATEMENT (SECOND)OFPROPERTY3 1.6 cmt. a (1977); and a lease for an uncertain term is prima facie an at-will lease, see Holcombe, 79 S.W.2d at 310. Where parties enter into alease ofuncertain duration, but periodic rent is required or paid, Texas courts - conflating atenancy-at-will and aperiodic tenancy - characterize the arrangementThe Honorable Bill Ratliff - Page 4 (X-0237)

as an “at-will lease,” but one that establishes atenancy from month-to-month oryear-to-year and is terminable at the end of the specified period “at the will” of either party. See, e.g., Virani v. Syal, 836 S.W.2d 749, 751-52 ((Tex. App.-Houston [lst Dist.] 1992, writ denied); Sellers v.Spiller, 64 S.W.2d 1049,105l (Tex. Civ. App.-Austin 1933, no writ); Hillv. Hunter, 157 S.W. 247 (Tex. Civ. App.-Austin 1913, writ ref d)); but see RESTATEMENT (SECOND)

OF PROPERTY

5 I.5cmt. d (I977) (Where the parties enter into a lease ofno stated duration and periodic rent is reserved or paid, a periodic tenancy [rather than atenancy at will] ispresumed.“). In Virani v.Syal, for example, the court considered a lease where the parties did not agree to the lease term, but agreed on arent of $800 per month. See Viruni, 836 S.W.2d at 750. The Virani court held that the tenants “were tenants atwill occupying the property on amonth-to-month basis.” Id. at752. Similarly, inSellers
v. Spiller, the court stated with respect to an agreement to lease at a specified monthly rental, but for an unspecified time, “[ ] s UC h contracts have uniformly been held to be merely tenancies from month to month, subject to termination by either party upon reasonable notice tothe other.” Sellers, 64 S.W.2d at 105I. Finally, inHill v.Hunter, the court determined that alease for anuncertain term after expiration ofan annual holding, was “amere tenancy atwill; and that inthe present case, where there was a holding over[,] under the former annual holdings, and the rent payable annually, the tenancy was from year to year, terminable at the end of any year at the will of either party.” Hill, 157 S.W. at253. In sum, under these cases, alease ofuncertain duration, but that requires periodic payment, is both a periodic tenancy because it is a “year-to-year” or “month-to-month” tenancy terminable only at the end of the particular period and an at-will tenancy because it may still be terminated “at the will” of either party.

The Texas courts’ conflation of at-will and periodic tenancies is relevant for our purposes because it has implications for the lessee’s right to notice of termination. A periodic tenancy is differentiated at common law from other tenancies by the notice requirement: “[The periodic tenancy] was developed by the English judges forpurpose ofrelieving the injustice resulting from the power ofboth the landlord and the tenant to summarily terminate the tenancy atwill. The implication in law of an agreement to give notice toterminate the tenancy was the vehicle by which the courts sought to remove the old injustices ofthe tenancy atwill. This requirement ofnotice was a distinguishing factor between the year to year tenancy and the other tenancies.” See generally Edward G. Northcut, Creation and Termination ofPeriodic Tenancies, I5 BAYLOR L. REV.329 (1963) (footnotes omitted). But with respect to the Texas case law, ithas been noted that: “As to year to year tenancies it seems to be the law in Texas, that ayear to year tenancy terminates ‘atthe end of each year at the will of either party.’ Evidently no notice is required to terminate a year to year tenancy and either party may end this tenancy, presumably, atthe end ofany year he desires.” Id. at 338 (footnotes omitted).

No Texas case, however, has specifically addressed the notice requirement for ayear-to-year tenancy. Sellers v.Spiller, dealing specifically with the sufficiency ofnotice to terminate amonthto-month tenancy appears to adopt the common-law rule that such tenancy may be terminated only upon reasonable notice: “it appears that [notice to vacate] was not given within areasonable time of the date on which Spiller sought to terminate his tenancy. In contracts from month to month, a month’s notice in advance of intention to vacate, where time of notice is not prescribed by statuteThe Honorable Bill Ratliff - Page 5 (JC-0237)

nor by the terms ofthe contract, has been held tobe areasonable time.” Sellers, 64 S.W.2d at 1051 (citations omitted). Amore recent Texas Supreme Court case, Bockelmann v.Marynick, 788 S.W.2d 569, 571 (Tex. 1990) suggests that notice may be required when a lease does not have a definite duration. The Bockelmann court concluded that anotice was not required to terminate the tenancy at issue stating: “The lease created a tenancy for a definite term (a tenancy with a specified beginning and ending date). The general rule is that atenancy for adefinite term does not require
atenant to give notice in order toterminate the tenancy, because atenancy for adefinite term simply expires at the end of the contract period.” Bockelmann, 788 S.W.2d at 571.

We believe that atermination notice isrequired toterminate aperiodic, year-to-year oysterbed lease because its ultimate duration isuncertain.’ Cf:Bockelmann, 788 S.W.2d at 571(lease for definite term, with abeginning and ending date, does not require termination notice because tenancy for definite term simply expires at end of the lease term). If rental is paid by March I, the lease continues for an additional year and there is no statutory limit to the number of years for which it may be so continued. There isno final lease ending date because the annual period does not define the duration ofthe lease. Thus, although the lease terminates upon failure topay the annual rent, and itis terminable atthe end ofany lease year, the particular year inwhich itwill terminate isunknown. Notice inthese circumstances isnot only reasonable, but necessary toprotect the lessee. We believe
a Texas court confronted with this issue would follow the common-law rule requiring notice to terminate a year-to-year lease. See Sellers, 64 S.W.2d at 1051 (adopting common-law rule that reasonable notice equal to one month required to terminate a month-to-month tenancy); RESTATEMENT (SECOND) OFPROPERTY 5 1.5 cmt. f (1977) (if no notice of termination is given, periodic lease will continue for another period). At common law, a six-month notice was required to terminate aperiodic year-to-year lease, but ashorter “reasonable” period may be sufficient. See RESTATEMENT (SECOND) OFPROPERTY 5 1.5 cmt. f(1977).

A chapter 76 oyster-bed lease, in our opinion, is not a lease for one year or a definite term such as would not require notice oftermination. A lease creates atenancy for adefinite term ifthe tenancy has aspecified beginning and ending date. SeeBockelmann, 788 S.W.2d at571 (“The lease [for a twelve-month term ending on February 28, 19851 created a tenancy for a definite term (a tenancy with a specified beginning and ending date).“); accord RESTATEMENT (SECOND) OF PROPERTY 5 1.4 cmt. a(1977) (“A lease is for afixed period oftime when it specifies its beginning date and its termination date as calendar dates. A lease is for acomputable period of time when it specifies aformula for determining the beginning and termination dates.“). Again, chapter 76 does not provide an ending date for the oyster-bed lease: ifrental ispaid by March I, the lease continues for an additional year and there is no statutory limit to the number of years for which itmay be so continued.

‘Notice toterminateamonth-to-month tenancyisnolonger anissuebecause it is specifically requiredby statute.&~TEX.PROP.CODEANN.591.001 (Vernon 1995) (specifying noticeforterminationoftenancies frommonthto-month orperiodic tenancies).The Honorable Bill Ratliff - Page 6 (JC-0237)

Neither is achapter 76 oyster-bed lease, in our opinion, aperpetual lease. Perpetual leases
are not favored by Texas courts, and a lease will not be construed to create aperpetual leasehold interest unless the intent to create such interest isevidenced by clear and unequivocal language. See Philpot v.Fields, 633 S.W.2d 546,548 (Tex. Civ. App.-Texarkana 1982, no writ); Hull Y. Quanah Pipeline Corp., 574 S.W.2d 610, 611-12 (Tex. Civ. App.San Antonio 1978, writ refd n.r.e.); Oglesby Y.McCoy, 255 S.E.2d 773, 776 (N.C. Ct. App. 1979). In Philpot Y. Fields, the court considered a lease for aterm of twenty years “and so long thereafter asthe lessee may use the premises for the purpose of maintaining and operating a LTX separator in connection with processing, refining, treating, and storing natural gas.” Philpot, 633 S.W.2d at 547. The Philpot court determined that the lease created aperpetual lease as long as the land was used for the stated purpose. See id. at 548. The court distinguished its case from the line of Texas cases finding tenancy-at-will when the lease term isuncertain on the grounds that (1) those cases did not involve
a complete, written lease clearly expressing the parties’ intent and (2) those cases did not tie the agreement’s termination to adefinite, ascertainable use ofthe land. See id. But the court also stated that itwould not apply the rationale ofthe earlier cases even ifthey were not distinguishable because the lease in question was “specific in expressing rights, obligations, and duties of the parties” and that: Although there is no definite ending date after the 20 year term, that

date istied tothe cessation ofthe use ofthe land for certain definitely ascertainable purposes. It appears that the parties intended to create aperpetual right to lease the land. When the parties’ intent is made clear, courts should enforce the agreement as written, even though perpetual rights are not favored.

Id.

While we are not convinced that Philpot correctly states the law, a chapter 76 oyster-bed lease isdistinguishable fiorn the Philpot lease. We do not have before usthe language ofaparticular oyster-bed lease, but we note that such a lease is a creature of chapter 76. Chapter 76 does not evidence aclearly expressed intent to authorize aperpetual leasehold interest. See also Oglesby, 255 S.E.2d at 775-77 (holding that oyster-bed lease did not provide clearly and unambiguously for perpetual renewal where no language in lease or in statute indicated an instrument in perpetuity). Oyster beds are the property of the state, of which the state may allow the use by private persons. See TEX.PARKS&WILD.CODEANN.4 1.Oll(c) (Vernon 1991). They are also natural resources that the state has an interest in protecting and regulating. See Act of July 21, 1919,36th Leg., 2d C.S. ch. 73, 1919 Tex. Gen. Laws 19l(the Act, among other things, is for the protection of oyster and marine life, to protect natural oyster beds, and provide for location ofprivate oyster beds) (caption). Given the state’s vested interest in oyster beds and the significance of alienating state property by granting a perpetual interest therein tantamount to a fee title, we believe that if the legislature intended an oyster-bed lease to be perpetual, it would have expressly and unambiguously so provided. Accordingly, we determine that chapter 76 does not authorize a perpetual oyster-bed lease.The Honorable Bill Ratliff - Page 7 (JC-0237)

Furthermore, because chapter 76 does not authorize a perpetual leasehold interest, the Department may not enter into or provide for a perpetual lease. The Department, like any state agency, is a legislative creature and possesses only such powers as are delegated to itexpressly and impliedly by the legislature. State v.Jackson, 376 S.W.2d 341, 344 (Tex. 1964); Texas Parks & WildlifeDep’t v. Callaway, 971 S.W.2d 145, 148 (Tex. App.-Austin 1998, no pet.). Specifically, the Department may regulate taking ofmarine life and administer the laws relating to oysters only in accordance with the Code. TEX.PARKS& WILD.CODEANN. $5 1.011(d), 11.001, 12.001(a) (Vernon 1991). Chapter 76does not expressly provide for aperpetual lease. And because the intent to create aperpetual lease must be evidenced by clear and unequivocal language, such authority may not be implied.

You also ask in your first series of questions: “If the state, at some point in the mture, revokes or renegotiates terms of these leases, will it owe compensation for lost property rights to these leaseholders?’ Request Letter at 1. While not completely clear, you appear to ask about possible, unspecified claims of unconstitutional “taking” of unspecified vested rights under an oyster-bed lease contract arising from unspecified actions taken bythe state, assuming the oyster-bed leases are perpetual. In view of our conclusion that achapter 76 oyster-bed lease isnot aperpetual lease, we do not address this question. Moreover, we note that such adetermination cannot be made in the abstract, dependent asitis on, among other considerations, the particular actions complained oftaken bythe state, the legal theory ofthe taking claim, and theparticularproperty interest affected. See, e.g., State v. Operating Contractors, 985 S.W.2d 646 (Tex. App.-Austin 1999, pet. denied) (discussing necessary elements of claim of constitutional “taking” based on legislative change affecting contractual right); Callaway, 971 S.W.2d 145 (discussing claim of inverse condemnation of contractual property easement); Bryant v. Hogarth,, 488 S.E.2d 269 ( N.C. Ct. App. 1997) (discussing timing of government regulation as affecting taking claim relating to franchise to cultivate shellfish); Working Waterman ‘sAss ‘nof Va..Inc. v.Seafood Harvesters, Inc., 314S.E.2d 159 (Va. 1984) (looking atwhether statute complained of in fact substantially impaired oyster and clam planting contract rights); Oglesby, 255 S.E.2d at 773 (looking at timing of legislative change increasing rental for oyster-bed lease in regard to claim of impairment of contract).

You additionally ask in your first series of questions whether a leaseholder has an “unlimited” right to sell or convey the lease or whether the lease expires on the death of the leaseholder. See Request Letter at 1. These questions also appear to be premised on aconclusion that an oyster-bed lease creates aperpetual leasehold interest. However, we do not believe that these questions arise only in the context of aperpetual lease.

We first conclude that chapter 76 implicitly authorizes an oyster-bed leaseholder to sell or convey an oyster-bed leasehold interest. Section 76.039 of the Code, which prohibits certain acts relating to oyster-bed locations, provides as follows: “This section does not affect the right of a person to sell or assign an oyster location or private bed.” TEX. PARKS& WILD. CODEANN. 5 76.039(b) (Vernon 1991). By its terms, this provision clearly assumes that the right to sell or convey oyster-bed leases exists and reiterates that this right continues. We find no express restrictions in chapter 76 on aleaseholder’s right to sell or convey an oyster-bed lease. Of course, the leaseholder cannot convey any more interest than the leaseholder has under the lease. Cf:The Honorable Bill Ratliff - Page 8 (X-0237)

Shipman Y.Mitchell, 64Tex. 174(1885) (person who acquired unexpired term oflease from original lessee bound by time of expiration agreed to in original contract).

We conclude second that a chapter 76 oyster-bed lease does not expire on the death of the leaseholder. Again, no provision in chapter 76 addresses this issue, but under the common law, a periodic tenancy does not terminate on the death of the leaseholder. RESTATEMENT (SECOND)OF PROPERTY5 1.5 cmt. f(1977) (“The death ofone party to aperiodic tenancy does not terminate the lease.“); see also Frazier v. Wynn, 472 S.W.2d 750, 752 (Tex. 1971) (three-year lease did not terminate on lessee’s death but constituted community asset and vested in widow and heir, citing Wilcox Y.Alexander, 32 S.W. 561 (Tex. Civ. App. 1895, no writ)); Wilcox, 32 S.W. at 561 (as a general rule, lease is not extinguished at death and upon death of lessee, lease in question became part of estate). In contrast, atenancy-at-will under the common law terminates on the death ofthe leaseholder. SeeMcNeely Y.Southwestern Settlement &Dev. Corp., 282 S.W.2d 932,935 (Tex. Civ. App.-Beaumont 1955, no writ) (rights of ancestor under tenancy-at-will ended athis death and did not pass to his heirs under statutes ofdescent and distribution); accord RESTATEMENT (SECOND)OF PROPERTY 5 1.6 cmt. e (1977) (“The continuance ofthe tenancy-at-will depends upon the presence of landlord’s and tenant’s wills that the tenancy continue. The death of either ends the presence of the will of the deceased, thereby bringing the tenancy to an end.“). Accordingly, an oyster-bed leasehold interest may be conveyed to a leaseholder’s heirs.

In this regard we note that the Texas cases conflating at-will and periodic tenancies when a lease is of uncertain duration, but rent is paid or accepted periodically, see Virani, 836 S.W.2d at 749; Hill, 157 S.W. at 247, are problematic. This is so because it is unclear whether an “at-will” lease that nevertheless creates a“periodic tenancy,” isan at-will lease that terminates with the death of the lessee, or aperiodic tenancy that does not. We believe, a court confronted with this issue, would follow the common-law position ofthe Restatement ofproperty and treat the hybrid lease as creating aperiodic tenancy that does not end when the lessee dies.

Your next three questions pertain to the meaning and consequences of “control” of more than 100 acres of submerged land that is prohibited by section 76.007 ofthe Code:

When a family member or family business partner acts as an agent for several oyster bed leaseholders, does that violate Parks and Wildlife Code, Sec. 76.007 ? What constitutes ‘control’? If it is proven that individuals do indeed control more than 100 acres at a time, is that alease-breaking condition?
Request Letter at 2.

Section 76.007 ofthe Code provides that: “No person may own, lease, orcontrol more than 100 acres of land covered by water under certificates oflocation.” TEX.PARKS&WILD. CODEANN. 576.007 (Vernon 1991). But neither section 76.007 of the Code nor another provision provides a remedy for a violation of section 76.007.The Honorable Bill Ratliff - Page 9 (JC-0237)

With respect to your first question, neither section 76.007, or any other provision we have found prohibits afamily member orfamily business partner from acting asan agent forother oysterbed leaseholders. Section 76.007 does not prohibit an agency relationship. Rather, it proscribes “control” of more than 100 acres of submerged land by the same person pursuant to an oyster-bed lease.

Neither section 76.007 nor another provision defines “control.” When the legislature fails to define aword or term, we must ascribe to the word orterm its ordinary meaning. See Monsanto Co. v. Cornerstones Mun. Util.Dist., 865 S.W.2d 937,939 (Tex. 1993); see also TEX. GOV’TCODE ANN. $3 11,011 (Vernon 1998) (statutory words and phrases areto be read in context and construed according to common usage unless they have acquired technical or particular meaning). The ordinary meaning of “control,” inthe present context, is “to exercise power or authority over.” III OXFORD ENGLISHDICTIONARY 853 (2d ed. 1989); see also BLACK’S LAW DICTIONARY 330 (7th ed. 1999) (“To exercise power or influence over.“); accord American Fidelity & Cas. Co. v. Traders & Gen. Ins. Co., 334 S.W.2d 772,775 (Tex. 1959) (“control”means “‘[ploweror authority tomanage, direct, govern, administer, or oversee.“‘). Ascribing this meaning to “control” as used in section 76.007 of the Code, we determine that no person may exercise power or authority over more than 100 acres of submerged land pursuant to one ormore oyster-bed leases. Whether aparticularperson exercises power and authority over submerged lands inexcess of 100 acres pursuant to one ormore oyster-bed leases requires investigation and resolution of fact questions, which cannot be done in
an attorney general opinion.’

While control of more than 100 acres of land under water pursuant to an oyster-bed lease is prohibited, we do not believe it is a “lease-breaking condition” that allows the state to cancel a lease by which such control is exercised for the following reasons. Texas courts generally do not favor conditions or limitations, the violation of which results in the termination of a leasehold interest. See Sirtex Oil Indus., Inc. v. Erigan, 403 S.W.2d 784, 787 (Tex. 1966); Hearne v. Bradshaw, 312 S.W.2d 948, 951 (Tex. 1958); Henshaw v. Texas Natural Resources Found., 216 S.W.2d 566,570 (Tex. 1949); Johnson v. Gurley, 52 Tex. 222,224 (Tex. 1879). At common law,
a lessee does not forfeit his or her lease for using the “premises” for an unlawful purpose in the absence of aprovision in the lease contract permitting a forfeiture in such acase. See, e.g., Wilson
v. Boyd, 556 S.W.2d 121, 124 (Tex. Civ. App.-Eastland 1977, no writ); Moore v. Kirgan, 250 S.W.2d 759, 767 (Tex. Civ. App.-El Paso 1952, no writ). See generally Annotation, Lease Provisions Allowing Termination or Forfeiture for Violation ofLaw, 92 A.L.R. 3d 967 (1979 & Supp. 1999). Accordingly, absent such a forfeiture provision in the lease, alessor may not cancel
alease for aviolation of the law unless a statute expressly provides for the forfeiture. See Moore, 250 S.W.2d at 767. In the present case, we presume that an oyster-bed lease does not contain a provision that allows the state to cancel the lease for a violation of section 76.007. Additionally, section 76.007 does not authorize termination ofa lease forviolation ofthat section. Compare TEX.

%e, e.g.. Tex. Att’y Gen. Op.Nos. JC-0020 (1999) at2(“[I] nvestigationandresolutionof factquestion[] cannotbe done intheopinionprocess.“);DM-98 (1992) at3(“[Qluestions offact. cmmt be resolved inthe opinionprocess.“);O-291 i(1940) at 2 (“Whether [buildings areowned andused exclusively for school purposes] presentsafact questionwhich we areunabletoanswer.” ).The Honorable Bill Ratliff Page 10 (X-0237)

PARKS ANDWILD. CODEANN.576.007 (Vernon 1991) with id. 576.017 (d) (Vernon 1991) (failure to pay rent when due will terminate lease).
Additionally, with respect to acontract that isnot on its face illegal, determining whether the contract violates a statute requires looking at the specific facts of the case and the intention of the parties in executing the contract. See Texas Employers ‘Ins.Ass ‘nv.Tabor, 283 S.W. 779,780 (Tex. Comm’n App. 1926, judgm’t adopted); Peniche v.Aeromexico, 580 S.W.2d 152, 156 (Tex. Civ. App.-Houston [1stDist.] 1979, no writ ). While itisthe general rule that aTexas contract made in violation of the express provisions of a state statute, or one that cannot be performed without such violation, isvoid and unenforceable, where the illegality does not appear on the face ofthe contract it will not be held void unless the facts showing its illegality are before the court. See Lewis v. Davis, 199 S.W.2d 146,148-49(Tex. 1947); TenasEmployers’Ins. Ass ‘n,283 S.W. at780;Peniche, 580 S.W.2d at 156. Furthermore, acontract that could have been performed in alegal manner will not be declared void because itmay have been performed in an illegal manner. Lewis, 199 S.W.2d at 149.

In the present case, it is not clear to us that any illegality, i.e., violation of section 76.007, appears on the face of an oyster-bed lease. Clearly, aperson who controls 100 acres of land under water pursuant to an oyster-bed lease is ineligible to control additional locations under section 76.007 through alease in his or her name. And the Department does not, we assume, grant a lease to aperson who already leases or controls 100 acres pursuant to an oyster-bed lease given section 76.007’s proscription. Consequently, we presume that control over more than 100 acres isacquired
or exercised through alease in another person’s name, and the lease.that “violates” section 76.007 is with aperson other than the “violator” of the statute, i.e., the person controlling more than 100
acres of submerged land. Thus, a lease by which control over more than 100 acres is exercised would not on its face show aviolation of section 76.007. To support atermination of such alease for violation of section 76.007 and prevail, the state would have to show acourt facts and intentions surrounding the questionable lease establishing its illegality when itwas executed.The Honorable Bill Ratliff Page 11 (X-0237)

SUMMARY

An oyster-bed lease authorized under chapter 76 ofthe Parks and Wildlife Code is a periodic, year-to-year lease that may be terminated at the end of any lease year by the state after giving reasonable notice oftermination. Achapter 76 oyster-bed lease does not create aperpetual leasehold interest. An oyster-bed leaseholder is authorized to sell or convey the oyster-bed lease. The lease does not expire on the death of the leaseholder. Chapter 76 does not prohibit a family member or family business partner from acting as an agent for other leaseholders; rather it proscribes the “control” of
more than 100 acres of submerged land by the same person. No person may exercise power or authority over more than 100 acres of submerged land pursuant to one or more oyster-bed leases. Control
over more than 100 acres of land covered by water pursuant to another person’s oyster-bed lease isnot a“lease-breaking condition” that allows the state to cancel the lease by which such control is exercised.

Attorney General of Texas

ANDY TAYLOR First Assistant Attorney General

CLARK RENT ERVIN Deputy Attorney General -General Counsel

ELIZABETH ROBINSON Chair, Opinion Committee

Sheela Rai Assistant Attorney General -Opinion Committee