n.le

state mard of~Control Austin, Texas

Attention Mr. ClarkHright

Gentlemen: OpinionNo. O-1676 Be: Construction

of Art. 647, B.C.& 1926, relating

to preferences

of looal bidders.

ThEIlk YOU fOc YOU btter Of %'VelUbr 13, 1939; requesting the opinion of this deyartamt aetothe proper oonstruotion of Article 647 of the Revised Civil &Etikbs of T&e, 1925,when applied to'the situation

set forth in your letter, uhiohreads in prt as follows:

"In oomsotion lath oertain bids a queetiorm

has arisen as tothe proper oonstruotioa ofArtiole 647, Bwised CivilBtatutes, 1926. On certain

types of merohandise pvohased by the Board of Controlfor various institution8 of the State, there are usually several bidders. Sam of these biddersare corporationsorganised under the laws of Texas tid doingbusinessin Texas. Epoh of themmI&aine im stook at their plaos of businessin Texas tist of the mrohandise; ‘ whiith, throughtheir Ifids, theyoffer to sell the 2tate. This sumotidise is also offeredfor sale to the general publio. The other biddingon these items are foreignoorporations~, eaoh of whioh has a permitto do ‘busiwcls in Th. Sme of them have agents or representatives; but 80110

of tha Mintains ia Texas a stook of the merohaudise they offer throughtheirbids to sellthe state. in some instanoes, both stateand foreign oorporations

have bid exaotly

the same emomt on the identical article.
8Question: Wder the faots above stated, where the bids are the same on the ideirtioal

artiole,

sad ass&ing that other thingsare equal,.mhioh, if any, of the above

mentimed bidders are entitled to preferenoe under Article 647
or any other statute applying?"
Article 647, supra,reads as follows: 'The terms and oonditions; end th# periodfor whioh suoh Mds or proposals are invited shallbe olearlystated in the advertisement. When ihe 8sme artioleis~estimated for by two or more institutions,

Imt of different

brand8 or grades, such article8shallbe purohasad se as to produoe uuiform$.ty

in use by eaoh institution, and other things being equal, supplies offered .ly

bidders

who have On establ%d-ml 100~1 'hlSine88, shallhave preference.8 (Wdersooringours).
Artiole 647 as originally enaoted

As Seotioa 4 of Senate Bill HOO. 172, Aots 1699, Tmmtty-sixth Legislature,

GeneralLaws 1699, page 136, and read inState Poard of Control- Page 2 (C-1678)

part as follcms: ".

. . The period for which such bids or pmp88als are invitedshallbe olsarlystated in said advertisem8nt, a8 8811 a8 the tern and 8onditicms

oontaaplated

by the provisions

of this ohapters

rhen'the ssme art1818i.8

estimated

for by '818~

or more inStitiiOn8,hrf of different hrand8
or grades,

the pumhasing agent may determine

vh.ioP. of the brand8OT grade6 shall bapurohamd 80 as to produce ruPifOrmiti

in'118e by all the iXI8titutiOnSr

The Seotionin question (norArticle 647,RevisedCivil Statutes, 1926) becsrme drtiole 7328 of the @viead Civil Statutes, 1911, andwas not materially ohanged. However,in 1915,&tic18 7328 was amended **(Act8** 1916, Chapter126) 80 asto appear lath8 8-e form a8 the present Artiole 647 of the &,V%SedCivil btptutes,

1926.

W8 oall **your** attention also to Art1018 650 of the T&visedCivil Statutes of 1925,

whioh read8

a8 foll8vsr "The,Board may advertise

for the variousarti0188 and supplies

nesded eithar separately or all together,

and mqy aooept a bid for ths s-e to In furnished either separately

or all byone bidd8r. Pmfemnoe Shallbe given,all thiag8b8%ng eqUI&tO stat.8 pmduots." (&dersoo&%

It may be aeon that th8 h8gislature haa directed

its igeatst&t the policr~r to be pursuedin making its oontraots should be to favor Tm 8ono8ms and Texasproduots

owr out of stat8 pmduots and businessestabli&me&~, other thing8being equal. From this interpretation of the legialativu

intentin 8nPoting the88 statut88, it is OlePrthEt under the fE8tSpresented in your letter, oorporate

Udders organi8ed

under the'laws

oftbis Stat8aad doing laz8lness.in this State,

,should be givun preference underktiole 647, supm, over foreign oorporate

bidders

havinga permit to do busin in this State, but not maintainingStock8Of I8erOh886dd.88 in Texas*
Perhapsa queati~oa

might be raiseda8 to.the authority of the Legislature to 80 disoriminate againstforsign corporate bidders. kuwer, u8 beliave that&an the State has east off its olbak of sovemignty, and ha6 stepp8d forward in its pmprietarg oapaoity, it may oontraot

a8 8xy individual

or private corporation. Just qs an individual or privatecorporation may dea it good business

to givupreferenoa

to Texas produos and Teas busimess

88riXblishmeats, 80 alsomay the Rater

Paragraph

3951 (3),

Volum8 144 Corpus Juris, page 1251, reads in part as follows: *A oorponrtioa is not a 'oiti8en'

dthin the meaning of that olause of the.Fbderal

Constitutionrhioh

deolarea

that the oitiz&s of each &at8 shall

be wtitled toall the privilegea and d8v8unitiks

of oitize~ns

in the saveralstates,

or the olausein the Pourteenth &aendmant

providing

that no stats shall

make or 8afW8-8oag law nhioh shall abridge the privilege

or inrmunities of oitiaena

of the United StdeS. Th8y ammere OreatUF38 of the local law, wtitled to moognition la other statesand toths enforoem&i of their oontraota

thsmia only on suohtermr a8 suoh 8tatas may se8 fit to impose.State Board of Control- Page 3 (O-1676)

Therefore,

these clauses

do not r&featthe mle that a oorporation created

by
one state oam &eroise noxe of the f7m~tioaa or pu-ivilegsa

oonferred

by its oharterin env other stats of th8 Baion. exoeuttithe oumity awd oonsent

of th8 latter. It follows that a statemay diso-&i&at8 in favir of its uwa oorporetions

againstoorporations ohartered by anotherstatstand suoh disoriwiIIptiorp

18 sot unoonstitutional as a di8oriminEtiOu EgPinStthe individual oitisens

ofth8 other state. As to the nature aud degree of disoriminatioa, it belongs

to the stateto detenuine, subjeotouly to auoh limit&ions on her soverei&q as may be found in the f'uadsmeatal law of the Qion.

. . -8 (Tkdersooring

ours).

It is well sstabllahed byth8 dsoi6ions

of the SupremeCourt of the UnitedStatesand the Texas SupremeCourtthatin enteringinto6 oontraot a state lay8oside

its attributes

of sovweigwty and binds itself sub8tautially a8 oae of its om oitisens under his oontraot, and the lawwhioh m866ures individual

rightsand responsibilities measures

with few exoeptioas those of the states.

Ra-hnan

v. Greenbow,

102 U.S. 672, 26 Law. Rd. 271) Poindexter

v. Greenbow,

114 U. S. 270, 29 Law Ed. 185; KeithV. Clark, 97 U. 8. 464, 24 Law Ed. 10711 Murrayv. Chvleston 96 U. 8. 432, 24 Law Ed:760; Charle~~

Soriherat Sons v. krrs, 114 Tar. 11, 262 6.W. 722: Conlsy v. Daught8rs

of the Republio,106 'Pew. 077, 166 S.W. 197.

See also 36 Cyo., PpgsS 669, 671s 26 Ruling Case Eaw, Section25,, page 392.

Conssqusntly,

you are respectfully advised,

End it is the opinion of this deparbnent,.thatwhan equal bids are subzittad to the Bxardof Control in aooordanos~with

the prwisions of Chapter3 of Title 20 of the Ravissd Civil Statutes,

1926, by a TeX68 corporation and a foreignOorporEtion, and all other ooIcSid8IrationS are eqUd, it is the duty of the Stat8 Board of Control and its purohasing

agent under Artiole 647 of th8 RsvisedCivil Statutes of Texas, 1925, to give preferenoe to the TeXrS oorporEtiono

JSsFGtegu

APPROVED

Nov. 20, 1939 /s/Gerald C. &nn ATIDRRET

GEB2AL OF 'Ex*8 Yoursvery truly

ATTCREEIGEBSRALOFTEUS

@J /s/Walter R. Kooh' Walter R. Kooh
Approv8dt

OpinionCmimitiee BWB- chainnut