### OFFICEOFTHE ATTORNEY GENERAL OF TEXAS
AUSTIN

Honorable D. C. Greer State El&way En&nesr Texas Highway Depsrtment Auetin, Texas

Dear Sir:

ju4gwnt in caum n the 98th Dirtrlot ik County, Texau, 4ePont deN&aoure & laintitie .va. Brady J, Chairnan of the State CowmllrEtlonOSTsxfM, et ridante, and a 

### relate4

TomArohsr an4 improvement an4 a oontraat was awarded to him for thle work onMay27, 1932. The oontraotor began work on July 18, 1932 but after perf'orming one 

### montha work on thle contract he defaulted an4 a receiver wae

### 505

gon. D. C. Greer~, l’age 2

appointed. This receiver proceeded with the 

### rtifill&ant or this contract but at the request of the eurety company the reoelvsrship was dissolved and the surety oompany took over the oonetruot~on 

### Orthe project on Deoembsr 31, 1932. Onor about. I;ay 4, 1933 t&e surety oompany defaulted an4 aft6ir 

### having been given notloe by the Stats Highway Duv partmcmt to oomplat@ this projeot ati they tail&& to raaume work In looordanoe with the oontraot the State took over the completion of thla oontraot on N&J13, 1933. Tooomplete this oontraot the State NoalVs4 bids and awarded a oontraot to thr womaa)tHenning Construotlon Compsny

### forthe 

### remainingwork. ORJune 29, 1033. h’hlle the work as required by thlr oontraot was phpsioally oomplotod on Ootober 10, 1935 the oontraot has not as of thlr data, been oomplrted duo to the iaOt that the State wlthheld 

### frosmbnfaedue ths oontraotor funds on aooount or labor and materials olalma having been illed with thr Department.

“After paylag to the Womack-Henning Construo

### tionCompanythe amount due thti 

### farthe 

### oompletlon oi thin oontraot tha State nowho148 **a**balanae ai Ql,g+S.CS of the monies due the oontraotor on aoaount of this projeot. Rsoently &. I. DuPont Do Nemours and **Company**fllsd a suit agalnet the oontraotor, his surety oompany and the State Highway Department to establish a llan against the 

### oontnctorr funds tbat wonow hold. on Novanber 3, 1943 the Dirtrlct Judge of the 9Sth Dirtriot Court of Travla County’entered a judgment against the **OOO** traotor and the surety oonpany and the State **Or** Texas for the #1,835.44. The requirement6 of tbir ju4gmant are that the Stats of Texas pay into the iiegiatery of tha Court the funds of the oontraotor that it nowholds to be distributed to the various persona who have filed and did establish 

### Inthi8 oourt their claim ror labor $$.n4 mataridls in eonneotion with the oon8truotion0rthir projeot. #hen the State Highway ComQiOaiOn raOOivO4 Oikrt%on in oonneotion with thir suit this iniOrlUEition waspk. D. C. Grew, Face 3



### passedto your ofilcs an4 your oifioe madea oonstruotire tendei of the $1,835.46 funds **OS** the oontraotor into the Flegirtary of tha Court.

“In oonneotion with the $1.835.45 fun48 that the State nowholds, It is our thought that this money **is** the property of the oontraotor ati 10 bring hel4 In the Trraaurp althor 

### topaytohim
or to pay to olalmantr In the event **that** the olaim la eatabllsho4 In a oourt of oompeteat jurladiotlon, the Stats being maraly a ataka holdar of the8a runas,
Vln quortion haa nowbeen ralae4 as to *ether the aontraotora run48 oan be wlthdiuwn rrom the Stata Treasurer duo to tha oonatltutlonal 

### provisiontbat the Lsglalature baa authority to appropriate funds not 

### lon(;er

thantwoyeara.
*The Leglalaturo every two years reapproprlatoa all State highway funds not previously expanded am roll as all newrun46 oualug Into the Trearury an4 it 18 our thought that all unexpm4ed funda ror oontraotual obligationa are reappropriated by the Leglalature eaoh two **years**for the payment o? tha State’s &~-stlonr on woh oontraot as well as otha 

### obllga-

. WArtiola 5472 (b) requlraa *that no pub110 

### offlolal,

wha 80notlfie4 ln 

### wrIti!&,#hall pay all of%ati monies 

### bondor warrants 80 said oontraotor, btit shall ret& enough of asi4 W&88, bonds or warrants to pay 

### oaidolalm,In 0866 it 18 l atablirhe4 by ju4gmant in a court or proper jur1a4iotlon----*. Under thlr statute fund@ that were 4ua the oontraotor
wern retained on account of the filing of labor and material claims an4 tha Stata would bare 

### beanin violation of the statute6 had lt paid all tha monies to the oontraotor 

### uponphyaleal omplrtlon of the work oallod ror by the v4ontraotor. -The State only
nowis $0 a position to lagally di~poae or thafunda
or +b ocntraotor, a judgment having been rendered
onNovember a, 1943 agalnrrt the aontraotor In favor of the Olalmants. It is %hWght that the state laHon. D. C. Graer’

, Page 4

n_otat thia time barred from the oompletion of Its oontraotual obligation.
WSaotlon 0 0s Article VIII 

### 0rthe State Constitution provider that *nomoney shall be drawn from the Treasurer but in purauanor of the ~peoIfie4 appropriation made by law; nor shell any qqropriatlon of money be 11~340 for a longer terma than two year+----*.

“Wewould llkr an opinion from your ortioe
as to whether or not funds are available for the ’ payment of the balanoe or the funds due under thl8

**‘ OontMot**  at this time.
wArtiola 4SS7 provides that *no olati shall Abepal4 from approprlatlona unleaa proa@nted to tha Comptroller for paymakt withln two yemra 0s the SlsOal yeara for whloh auah approprlati,on was m&e---- *,

we ~~14 further like to have an opinion 

### from youroffloe as to whather or not the Stats la barred frommaking paymentson aooo*untof a oontraat wha% fund8 

### wereheld by the State on aooount Of the flllng of 

### olal~ under Article 5478 (a) au4 (b) when payment 00~14 not have been ~aa4ewdthln two year8 from the oloae of the fleaal year from whloh auoh appropriation
was madeduo to the fact that the claim had not been released or a~judgmalt entered prior to this time.
*For your Information thora la attaehed hereto
a oopy of the judgmmt In Cause No. 68639 In the 98th Diatriot Court oi Travla County,’ Texar in the suit styled E. I. DeFont DeNemoure and Companyet al. Vs. B&y y. tintry, Chairman of the State Highway CODDmlraion or Texas et al.*
#e shall anawer both of your ques~tlona together a8 the first question la speolflo an4 the asoond queetlon la merely a general one dealing with ths mameaubjeot matter.

### HOI%.

J-ii. Creel', PsigS 5

Ant% your lottar Ik18 set out In detail the provision8 of the Conrtltution and the Aatute8, we will not burden your tint8 by relteratlng the came herein.

In the oa8e of Texae ColnpenyP. Sahriewer, 38 3. w. (Ed) 161, the Courthold that Art~ciee 5478a end 547Zb, Vermm'8 tinnotated Civil iitatuter, gave nub-oontreator8, es well a8 geaera1 elmtraCor8, a 11~ oa money paid for public improve.aQnta. That Court IIIthat oaoe further 

### heldthat the tit&to Elghway De

### portment **in** rlew **of** iirticle8 **6078** to **6674,** and nrtiole8 66140, 66748, 66741 and 6694, hev8 8upervl8loa over the expenditure of hlghuay 

### fundsand that the State Reaeurer I8 merrly a **depooltory of**  suoh 

### fundr.

It ha8 been held by the aourtr of Tara that all state hi&hwayr are underthe oxolusl~o ooatrol and management of the 

### YtnteBlghwey Department.

The Court held In the 0a8a ot Atkin V. Texar Highway 

### Department,

801 3. W.i%6, that the Legirlature la 

### deelerlngth5t all funds malag into 

### tb head8 of the tjtete Blghwap Coaslr8lon derived iron ro@8tratIoa fee8 prerorlbed **for motor**  vehloler,
or froa nap other 8ouroe. shall bo deposited with the State Treasurer to a 8pealal aoaorurt de8igAated as the "State Highway Fund" **aooount,** and that 8srtluI8 a valid approprfetlon, though not, bf oourse, 8peolfylng the ammats to be realized; 8imilar prorIslon8 for oontlngent amount.8 having long **been reOW!iiZsd**  **a8** valid approprlatioar.

ktia~le 4357, **Vernon ’** **8** j¬ated CIvIl Statutes, provider a8 Sollow8:

** *'* Noolalm shall be 

### paidfiosl**OQprOprie tlona**  **unle88 praaented**  **to tke**  Oonptroller for paymnt within two (8) yeer8 from the olO8e o? the ilace year far whIoh such epWoprIatIon8 were made, but any alala not presented for payment within 8uoh 

### periodsmy **bs** preeented to the Legl8leture **a8** other al~ims tar which no appropriation8 ere 

### l vall*ble.* * 5"

In the ou8e of winder t&08. v. Sterling, 18 S. K. (Ed) 127, the Court, **on** page UO, in dealing with lien olaiaentr r,im.i-IX=* 2. c. Crder, pug0 6

i zdto these ao pirtles in the aaae presented ia your inquiry,
:-

CTho

### ~rorlslon for wlthholdlng Boney, warrants, l

to., 

## ror paymeat ,0r a olala 88 and wh8a redwad to judgznnt, wlth **laak** of requirement **for** Judfgant wlthla say given t&110, it i8 said, render8 the statute IndePlalte. To this 18 added a ohrlrge of axbitrariLtO88 ia forOh$& th8 OOUtreOtOrt0 aWatt the plecIi.un of the **oiaimat** In **respeot** to time of juegmnt. **‘ &a**  statuSe, **however, but**  **Paw8** a oaatueacy upoa time eoourreaoe in ad l pproprlato oa84 **awneye, eta.,**  become due and payable to the aoa**traator,** and 

### for rhloh,OS**noted,** the **part.ie8** to the aoatraot (by reference and inputation) stipalata. 88- aldee, no Teasoa 18 l gpapayent

for p*eoluaIn6 

### adjudi- .oatIon oi the okaita or its Ir&vaJ.idStr oa 1o1e of th8 eontra&tor, It he **becoa88** 

### di88oti8fled with pxvorestlaatloa of tha Olal0sa:~,*



## da apia on pago 189, the Court Said;

*+ + * ?baia(l the SUbjOOtS of ii&LB and ttm * OOOdltIO~S for their regI8tretloa ana l nforoemeat is atamillar legI8latlre p0wer. Weare glrea a0 ratfaronoe to preoedentr (and waknow 0r none) against lnclu8ion 

## 0rpub110 moneys aad SOO~itieS or tE8 legI8latln('8overeIga, (a8 and whoa payable or deliverable to oontraotors, eta.) within the StAb3OOt **mttor** of llens deolsred **for** materialmen. meohanIor. l to. irnclwhen the Mea (in this ehuter-proriaed) - ottao&ea. t&a 

### 0xODer8yto which it l ttaohes la thr, pr~r~W of the OOntreOtInR debt&r andWA or the state or muaialpal~ty. tlm latter being debtor 0Z that aebtor **or** baIlo8. eta. 00rr0x00, there is a0 ooatempt of the letter or spirit of Section 2W.artiolo 3. OS the Constitution, to whloh we a8eWDIoounsel Intsnded to refer.*In the ease oftWepubllo Niatlonel Bunk an&'Trust ComWY v. YasBaohuOetts Bondingt **fnsurenee** Company,68Ted. (8d) d3, Honorable Judge Sibley of the Cirault Court of kppeals, in &lIng with the okso in which the surety oa 

### thebond of th eon

### traaetorwna suingtorecdl aoneys

### that hadbeen paid out by the oity on tha RTOPOSeaa*slgrrpLsnt 

## 0s the aontraotor to a bank, be

## foretbaurriaavit about 

### mentioned

## inproof

## 0s pay:wnt 

## 0sall @lab8hed beed 

## -a., said in plain la~gurrg8 at pago 447, with nferenoo to **that** rbet sItuotIoA, a8 **fOisOW88**

Wls (the sursty*a)equity originates in the 

### agreement of 

### the bltf and the contrmtor, relnrorcea 

### bythe**aot** 0s 

### 1989tothe am8 

### errrot,thrt 

### oertaln peroentages 

## 0sthe earsed papwmts uhall be **remned** 

### for Yfinalpayaent.rorthemaurlty ofth,olty**and** sumty, andequity treating this **fund** as a trprt will
see to Its protectloadna 

### appllaatloq, raoallingit 

### ii f3iSappliad. This IS 

### the hOart 

### oftbsbill. Prairlo Statefiatlonal Bank

### v.UnitedStates, l&d0.S.Ic.27; Olader County v. Dotraft Fldallty k 

### Surety Co., 57 F. (Ed) 449; **pirat rational**  **Baak** v. lfdellty &Deposit $4 v. Claiborne Parrlrh bohool Board, 11 **F.** (zd) **65 P.**  **(8a) 9b9$**  Fideiit~ **Lh**

## DepOSit CO.Of**Lbp**

**404. ”** 

In tb8 0~86 OfJsaith t. TUB ciW&~~y, 33 8. W. (3d
8t page**797,** the Court said: **1 774,** 

"Senate 3iil 94~,kOt8 39th L8gISlaturO (lU3S)
**c. le6,**  **P. 456**  **(Y.A.C.S. (**  **Arts. 6694a-6d74n)**  was ***a** aotoa by the ammeLegiS&Gum whloh paarea krtieler **547er** 

## ana5470b.



### *Itprovides **that** the 

### State shall retain 10%0s the oontrpaet price tmtll the **work** htrrbeen aooepted, and it exm=eooly r0rbIas fIAal paywnt of tha 

### retained SUmuntil it 18 shows that *all 8~8 of monel **due** for any labor, materills, or equIpmAt furnished for the purpoue Of SuOhiroprOvtiUiOAt8

### sadounderanySuch aoatrvot have bOOA

### paid.* **iat. dd7apl)** 

**.** sad. 13 0s 

### theket (v.~.c.ii.,

It IS groper to ooaet~ue this xot 50 a **; ‘** **art** 

## 0sthelo@iletlon pravldlng for the lion In 

## questlOA, 88 it rehte8 tQthe BeiMSUbdebt BurttaT **and** %?+a &Weed at the 8811, !I8selon JI the Lsgf81ature.m

### 511

nndagain nt the top of Pugh 777, the Court said:

"It was the lnteiltion of the hglslature **to** enable those lurnlehlng L:bor, mterlal, eto. 

### to a sub-oontraofor for any‘~ubLlo im2rove~nt **to receive**  **paymat** theretor **to** the extent 0r **any** unpcrld balance due raid cub-oontreotor at the tlu@ notice required by 8tatute 18 

### given.

Vie 

## 6180oonolube thht the 

## ruin6 orthe notloowlththe 

## stutoHighway CoPsef88lon *a8 a 8triOt 0~3piianQe 

## Withthe WOVl8iOn Orth8 8Ot, which 

### r8qulre8the8.aa8 to be

### riled with 

### the 

## Orrloiel, whove duty it 1s to **p&y** the orlglnal oontractor. Ihinder i&08. v. sterling, ll0 Tex. 2bB, 12 6. ik. (2d) 127, 14 Y. W. (2d) 808; !detropolltan La8ualty In8. Co. v. Chean8y, et al., (Tex.,Clv. ..&I.) 92 a. n. (2d) 801; iseet Chicago **Perk** **Com*r8.** 

### v.iiestern 

### &mite Co.,eoo Ill. 527, 66 I@.P. 37; JaUu38p. iidi, ILlLO.,

### ‘I.. 

### Jer8ey City, 62N.J. Ea. 489, 60 n. 603.

n. . *

*all sonay deposlted to the oredlt 

## Orthe highway rUnd IS by the teXYII8Ofartiole 66740 made subject to 

### approgrlatlon ror tba 

### 8;reOiriO purpoee0r 

### oaidiqrovetintor 

### 8alday8temor 8tat.e hi&way8 by the highw8y d8partmant.

"It thua a?pamr thnt the Legislature has eatabllshed a 4epart:snt and clotbed it with iull and complete authority to sake oontmat8 

### rorthe is2roverpnnt of ekte hi5bwayS 

### andcreated a epeoial fund out of which the ObligntlOa8 *de by such **de** ptirt3xmt 8bU11 -bedlschiirged. 'i'hehlshway 000!3&8- slon ie charged with the duty or laying thee8 obllgationr from this epaoia]. fund. shea oonalderatlon is given to the sttrtutes ve8tlng control **over** design&ted stiite highway* in the atate hi&my ooml8- alon, and uuthorlzlng suoh body to oontmot and expmd **fun%u** eet ag~!irt for that purpose. it beeowe obvious that such dep0t:mnt is the cne whoee **duty**it 13 to pay 

## oontnctora tar work perrome upon

et&to highways. 

### It is true that the 8tnte tredm-er actually pay8 **outthe** mcdy on depoelt to the oredit of the highway department,a8 is generally the oase ath au obligations izk&eby **a** 8tate de'partmnt ror ana on behdr 0r the stite. Etedoes thi8, however, E;Sa mre dlsburrrlog officer and on VoUOhsr8 **issued** and agi.~roved by a majority of the highway SoimIi8SlOlI. iie ha8 no di8OretiOn in paying olelms 0r 

## oontrtsotorr when they **are** properly approved 

### bythe 

### highway**Oo!uniS** slon. CertAnly suoh dlsoretlon wa8 intended to be 

## lodgedwiththe official **Who80** duty it 18 to pay Orr and dl8oharge suoh obli~ation8. The Leglalrtture might kve 

### nmde~rovlslon for the 8paolal highway iund~to be deposited in 8oae prlviite banking institution. Ii it bud done 8o, stio~hbank would actually pay the vouchers iseuad by the hi&way 

## departaent,but under such CirOWZStiMiCe8it Could in ru)proper 8eD88 b8 0011- sldered the oiflolal whose duty it **un8 to**  

## pay**ooa** traotor8 fur 8erViOe8 perromed **Under** th8ir oontract8."

In 

### the case of F. C. 

### Crane v. Chue. C. Bellar, 195 6. iii‘

.(id) 167, the Court held that a materialman* 

### aotlonto establish a llen 

### onmoney8 due or to beooze due to a pub110 eontroctor under the statute authoricing such a 

### llsnonthe **riling or**  

## notice .i8a specie8 0r 

### "gsrnlrhnnnt;"Vernon*8 iuxmtated .itatUte8, tirticle8 5150, 5372a, 547Eb, 6674~

By reason or the 

### toregoingauthorltle8, it 

### isthe opinion of this aepartinent that the Legiednture hn8 put the money ordered paid by the oourt in the judgwmt in the **o&80 or**  Ii. I. duPor,t deNemour8 k,Company, et al, v. Brcidy P. tintry, Cholman of the ktute iii&may Comrslsslon, et al, beyond their rurttrer pox-er to 

### reapproprlate **the 8a:~.** 
Th8 money retain66 by the Hlgharccyl;epartmnt on the original cmtruet, **a8** uwae fsll due and becnse impounded by the filiug of oOtiOe8 by lien Ck.3iiWlt8, hje placed such fund8 upon which such lien8 attached at the tii2.e 0rthe riling 0r such 

### notloee,out of the hands ot the Legiskture and the r;t,::e of Texes, an&said ;noney then 6eom5 the property of the aontruotlng debtur or hi8 8ub-oontraotor or lien o,laimant8 as the

# F

513

oourt maydecree, and wae no l.onP,ar property of the .Xate, t& Litat&belag raer6ly a dobtot or debtor abovr ballee and 8uoh money bocam ln law a trust fund held by the State offioia1.a Tar floe1 payment in acoordance with the judgwnt of **the court**  **in** da 0aiU. Weare, theretore, orthe opinion tbt gha dlsburziemsnt oT euch fund8 at thla time in accordance with the judezent of the oourt in such aaae would not be in eontraventlon or drtlale 8, Section 5 or the Conatitutldn at

‘PU~I, end, thereforr, Article 4357, 8ugra, would not epply.

gusting that thl8 letter an8vmr8 **your** inquiries utlrfnctorily, we be6 to remain

Your8 very truly