, 

JIM MATTOX 

Attorney General 

The Attorney General of Texas 

August 14, 1986 

Supreme Court Building 

P. 0. Box 12548 Austin, TX. 78711. 2548 

512/475.2501 

Telex 9101874.1367 

Telecopier 51214750266 

Honorable W. N. Kirby 

commissioner 

Texas Education Agency 

201 East 11th Street 

Austin, Texas 78701 

Opinion No: .JM-531 

Re: Current validity of a lease 

entered into by a school district 

in 1950 

714 Jackson, Suite 700 

Dallas. TX. 752024508 

21417428944 

4824 Alberta Ave., Suite 1W 

El Paso, TX. 79905.2793 

91515353484 

SO6 Broadway, Suite 312 

Lubbock, TX. 79401.3479 

SW747-5238 

4369 N. Tenth, Suite B 

McAllen, TX. 78501~1685 

5121682.4547 

200 Main Plaza, Suite 400 

San Antonio, TX. 78205.2797 

51212254191 

An Equal Opportunity/ 

Affirmative Actlon Employer 

Dear Mr. Kirby: 

You request advice on the validity of a lease agreement entered 

into in 1950 by the Board of Trustees of the Fredericksburg 

Independent School District [hereinafter the "Board"]. The lease is 

between the Board and a lessee. It provides that the Board lease a 

designated tract of the school district's property for a monthly 

amount of $60.00 for 50 years in exchange for the lessee's agreement 

to expend at least !;30,000 on an office building to be erected on the 

property. It is a:Lso relevant to your inquiry that the lease agreement contained an unconditional right on the part of the lessee to 

assign the agreemer,t to a third party. 

In 1973, mom than 20 years later, the lessee assigned his 

interest in the lease agreement, with the Board's approval, to the 

president of the Board. That individual, the "assignee," remained a 

school trustee unt:.l approximately 8 months after the assignment when 

he resigned. 

You also inform us that at the time of the assignment in 1973, 

the Board was reiting office space in the building. The Board 

continued to rent space after the assignment from the assignee until 

the rent was raiseil to an unaffordable amount. Moreover, you indicate 

that the school district, through the Board, in all likelihood will 

never locate an iwtructional facility on the property. The lease, 30 

years from the date it was entered into, is hindering the school 

district from obta:.ning the best and highest use from its property. 

In that regarcl, you have asked the following questions: 

1. Whether the prior [Board] had the authority 

to lease the school property under such terms as 

are cont;Lined in the lease? 

p. 2447 
Honorable W. N. Kirby - Page! 2 (JM-531) 

2. Whether the [Board] is estopped from 

attacking the lease in light of the fact that the 

district has accepted rentals for 35 years without 

attempting to set the lease aside? 

3. Whether the assignment of the lease in 1973 

to a then-current member of the [Board] affects 

the validity of the lease? 

4. Whether the school district has any right 

to the rentals rweived by the lessee and assignee 

if the lease is ii fact illegal? 

These questions you htve presented contain issues of fact which 

must be decided before a complete resolution of the problem may be 

addressed. This office dc#es not resolve factual questions in the 

opinion process. See. e.g.,, Attorney General Opinion JM-486 (1986); 

JM-394 (1985). However, be will address those matters regarding 

strictly legal issues in order to provide some guidance in this 

matter. 

It is well settled law in this state that the board of trustees 

of an indeuendent school district has exclusive power to manage and 

control school property. :Irustees of Independent- School District of ? 

Cleburne v. Johnson County"i)emocratic Executive Committee, 52 S.W.Zd 

71, 72 (Tex. 1932); see ali& Attorney General Opinion M-1047 (1972). 

The Board's discretion is limited to the extent that it will not use 

this power to impinge upon the district's governmental purpose, that 

is, operating a public school. River Road Neighborhood Association v. 

South Texas Sport, No. 04-ll4-00206-CV (Tex. App. - San Antonio 1986, 

rehearing granted) (not :!et reported); Royse Independent School 

District v. Reinhardt, 159 S.W. 1010 (Tex. Civ. App. - Dallas 1913, 

writ ref'd); Attorney General Opinion M-1047 (1972). This reasoning 

is consistent with the rule that the governmental powers or functions 

of a government or governmental agency can never be abdicated or 

bargained away. See Clear Lake City Water Authority v. Clear Lake --- 

Utilities District, 549 S.b'.Zd 385 (Tex. 1977); see also Banker v. 

Jefferson County Water Control and Improvement District, 277 S.W.Zd 

130. 134 (Tex. Civ. App. - Ezaumont 1955, writ ref'd n.r.e.). 

The question of whether a particular action of a school board 

impinges upon the district's governmental purpose, that is, operating 

a public school, is essentially a question of fact. See River Road 

Neighborhood Association v. South Texas Sports, No. 04-84-00206-CV 

(Tex. App. - San Antonio 71986, no writ) (not yet reported); Royse 

Independent School Distric,: v. Reinhardt, 159 S.W. 1010 (Tex. Civ. 

APP. - Dallas 1913, writ repd). 

p. 2448 
Honorable W. N. Kirby - Page 3 (JM-531) 

It is argued by the present Board that the lease is presently 

impinging upon the Board's authority to perform its governmental 

function because the Board is unable to take substantial steps to 

increase the revenue being generated from the property. We have not 

found any authority supporting the proposition that a governmental 

body is entitled to renege on a valid contract simply because it is 

financially advisable to d', so. Cf. City of Big Spring v. Board of 

Control, 404 S.W.Zd 810 (Tex. 1966). As indicated above, these 

factual questions are beyond the scope of this office's authority. 

The Board also cites South Texas Sports, m, in support of its 

.position that the 50-year%ase agreement should be declared invalid. 

In that case a school board entered into a le'ase agreement which had a 

potential maximum duratior. of 50 years. The lease was between a 

professional football club and a school district for certain property 

owned by the school distr1c.t consisting of an athletic stadium. The 

stadium had been primarily used as a place for athletic contests 

involving schools of the d:Lstrict. The football club, lessee, leased 

the stadium to play its hone games. Id. The Court of Civil Appeals 

held that the lease was invalid becauzit effectively destroyed the 

power of the district to manage and control the school property for 

school purposes. 

The court declared the lease involved in South Texas Sports 

invalid because the record revealed that although the lease provided 

that the club may use the stadium except when the school district 

needed the facility, scheduling conflicts were in fact resolved in 

favor of the lessee. The school district's use of the facility was at 

the discretion of the lessee. Unlike the facts presented to us, the 

record supplied to the court was sufficient to determine whether the 

50-year lease impinged upon the school district's governmental 

function. Moreover, the cc,urt did not conclude that because the lease 

agreement would bind the school district for a period of 50 years it 

was void as contrary to public policy. 

In response to your third question, it seems clear that the 1973 

assignment to the then-current member of the Board did not affect the 

validity of the lease. T!la assignment merely created a contractual 

relationship between the :Board and its president. It was this 

contractual relationship w~:Lch Is void and is against public policy. 

Accordingly, the relation:rhip between the original lessee and the 

Board was unaffected by the: assignment. 

The lease agreement g;ive the lessee the "unconditional" right to 

assign his interest in the l.ease. Therefore, the Board's approval was 

not necessary to complete the transaction between the lessee and the 

then-current member of thr, Board. The assignment was made prior to 

the enactment of article 9313b of V.T.C.S. Therefore, the validity of 

the assignment turns on whether it falls within the common law 

p. 2449 
Honorable W. N. Kirby - Page! 4 (JM-531) 

prohibition which bars sct.001 districts from contracting with any 

entity in which a trustee has a pecuniary interest, no matter how 

small. See Meyers v. Walke,;:, 276 S.W. 305 (Tex. Civ. App. - Eastland 

1925, nowrit); City of EdJ.r,burg v. Ellis, 59 S.W.Zd 99 (Tex. Comm'n 

APP. 1933); Delta Electric I:onstruction Co. v. City of San Antonio, 

437 S.W.2d 602 (Tex. Civ. Al,p. - San Antonio 1969, writ ref'd n.r.e.); 

Attorney General Opinions JM-424 (1986); JM-379 (1985). Such a 

contract is "violative of the spirit and letter of our law, and is 

against policy." See Meyers v. Walker, supra, at 307. Contracts in 

violation of the Meyers v. Urrlker doctrine are void. Id. -- 

Although the assignment between the lessee and the assignee did 

not involve a direct contract.with the Board, the contractual 

arrangement falls squarely l&thin the Meyers prohib.ition. An assignee 

stands in the same position as his assignor. See Houchins v. Scheltz, 

590 S.W.Zd 745 (Tex. Civ. Ap:?. - Houston [14th-St.1 1979, no writ). 

The Board uresident was entitled to receive rent which is a oecuniarv 

benefit. see generally Deli:a Electric Construction Co. v. Ci;y of Sa; 

Antonio, 437 S.W.Zd 602 (Te::, Civ. App. - San Antonio 1969. writ ref'd 

n.r.e.). Therefore the ass:Lenment between the lessee and the assignee 

was illegal and void and had no affect on the validity of the original 

lease. 

You also ask whether ,the resignation of the Board president, 

eight months after the 197: assignment, had the effect of curing the 

void transaction. The MEfers v. Walker court also stands for the 

proposition that an ultra v.Lres and void contract with governmental 

entity is not subject to ra,?ification. See Meyers v. Walker, 276 S.W. 

306, at 307. Therefore, the subsequent resignation could not cure the 

illegal or void contract. 

Finally, questions two (2) and four (4) are so intertwined with 

issues of fact that we cannot provide definitive answers. These 

questions involve equitable considerations which requfre the balancing 

of factual and legal prine:iples beyond the scope of this office's 

authority. 

SUMMARY 

A board of trustees of an independent school 

district has the authority to lease school property so long as 1:he lease does not impinge upon 

the board's authority to perform its essential 

function; i.e., to operate public schools. The 

question of whether the 50-year lease agreement, 

which is hindez,ing Fredericksburg Independent 

School District from obtaining a higher rental 

value for its prop=rty. impinges upon its 

essential governmental function and is a question 

p. 2450 
Honorable W. N. Kirby - Page: 5 {JM-531) 

of fact. The sin3:Le fact that the lease is for a 

period of 50 year; is not necessarily contrary to 

public policy. 

Although the 1373 assignment between the Board 

president and the Lessee did not involve a direct 

contractual rela,::ionship with the Board, the 

effects of the armignment created a relationship 

which resulted in a pecuniary benefit to the Board 

president, and therefore, was void as against 

public policy. The question of whether a party to 

a contract may benefit from the equitable doctrine 

of estoppel invo:.ves a determination of factual 

issues. 

JIM MATTOX 

Attorney General of Texas 

JACK RIGHTOWER 

First Assistant Attorney General 

MARY KELLER 

Executive Assistant Attorne:r General 

RICK GILPIN 

Chairman, Opinion Committee 

Prepared by Tony Guillory 

Assistant Attorney General 

p. 2451