Court Opinion

ID: 4130288
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:02:33.280838+00
Date Added: 2024-06-11T14:34:00.023933
License: Public Domain

June    5, 1990

    Mr. William D. Taylor              Opinion     No.   JM-1181
    Executive  Director
    Department  of Commerce            Re:    Constitutionality     of appro-
    P. 0. Box 12728                    priations   to the Texas Department
    Austin, Texas     78711            of Commerce    and the    Comptroller
                                       of Public Accounts to pay       former
                                       employees   and contractors    of   the
                                       Texas Conservation      corps I   Inc.,
                                       under   article    III,   section    44
                                       of the Texas Constitution
                                       (RQ-1853)

    Dear   Mr.   Taylor:

          You ask whether      the Texas   Constitution   makes    invalid
P   two 1989 related      appropriations   that   authorize   payment    of
    certain unpaid claims against the Texas Conservation            Corps,
    Inc.    In particular    you are concerned   about the validity      'of
    the appropriations      under article   III, sections 44, 50,       and
    51 of    the   Texas Constitution.      Since   we hold    that   both
    appropriations    violate article     III, section 44,     we do    not
    address    their    validity   under   any   other    constitutional
    provision.

          One of the     two appropriations     is   a rider that    appro-
    priates $150,000 from the General Revenue Fund to the              Texas
    Department   of Commerce     [hereinafter    the department]    to   pay
    the unpaid wages of       former non-executive     employees,   program
    participants,    and contract    laborers    of the Texas     Conserva-
    tion Corps,     Inc.    [hereinafter   called    the   TCC].    General
    Appropriations    Act, Acts 1989, 71st Leg., ch. 1263, art.            1,
    at 5166    (Rider    19).   That rider     limits    amounts   paid    to
    contract   laborers to no more than $2,500.          Id.

          The other appropriation     authorizes  the Comptroller    of
    Public Accounts to expend $150,000 from the General        Revenue
    Fund to satisfy approved     claims of eligible    former  vendors
    of   the  TCC.    Id.   at  5180.    The   appropriation   to   the
    comptroller   also provides   that any eligible     vendor may   be
    paid an approved claim to the extent that the claim does not
    exceed $2,500. The amount of an approved claim in excess         of

                                          P. 6220
Mr. William     D. Taylor    - Page   2   (JM-1181)

$2,500 may be     submitted   to the   comptroller    for payment     in
accordance   with   section    403.074    of   the  Government     Code
entitled   10Miscellaneous Claims."     Finally the     appropriation
to the comptroller      provides that     l'[a]ny balance    remaining
after payment of the approved claims in conformance           with the
provisions   herein may     be transrrred      to the   appropriation
for Miscellaneous    Claims."1      -1

      In 1986     and 1987     the    Texas Department         of   Community
Affairs entered       into    contracts      with the      TCC,    a private
nonprofit    corporation,     to provide       job training     services      in
accordance    with    section 123       of   the federal       Job    Training
Partnership    Act.    29 U.S.C. s 1533 (federal funds authorized
to   finance     agreements      between     state     agencies,       certain
administrative     entities      and appropriate        'local    educational
agencies):     see also      29 U.S.C.       55 1501,      1551-52,       1574,
1601-05.     The   contracts     required      the   TCC to     establish      a
residential    education      and    training      program     and    provided
federal funds      to    the TCC     to    do so.      During     the   period
covered by the contracts          the Texas Department         of   Community
Affairs was authorized        by the Texas Job-Training           Partnership
Act to    implement      job-training       programs    such    as    the   TCC
residential      program     and   to    fund    eligible       job-training
programs with monies received under the federal Job Training
Partnership    Act.    Acts 1983, 68th Leg., ch. 1024, 5 5(b), at
5451, (prior to amendment         by Acts 1987, 70th Leg;, ch.             374,
5 2(b),   at  1855,   current    version    at  V.T.C.S.    art.    4413(5i),
5 5(b)).

      1.   The   1989   General       Appropriations     Act     contains
separate appropriations       to   the comptroller      for payment      of
miscellaneous    small claims      pursuant to     section 403.074       of
the Government    Code.    Those appropriations       total   $1,500,000
each for the years      ending August 31,        1990, and August      31,
1991.    Acts   1989, 71st     Leg., ch.     1263, art.     1, at    5180.
Since we hold the $1,500,000         appropriations    for the    payment
of miscellaneous     claims unconstitutional       to the extent      that
they,  in  conjunction    with   the  $150,000   appropriation    to   the
comptroller,    authorize     payment of     claims in violation         of
article III,     section 44,      of the    constitution,    we   do   not
address the question whether          the comptroller    may pay     under
the separate    $1,500,000    appropriations     all unpaid amounts of
eligible vendors      under and      over   $2,500 whether      they   are
approved or not.

                                       P. 6221
    Mr. William    D. Taylor   - Page   3   (JM-1181)

           .

          The Texas Department       of Community     Affairs in     October
    1987 decided     to terminate     its support     for TCC,     effective
    December    1987,    amid   charges    of   TCC   mismanagement        and
    embezzlement.     The state paid      the contractor    the money     due
    it.    The   responsibilities      of   the   Texas    Department       of
    Community   Affairs under     the Texas Job-Training        Partnership
    Act were thereafter     transferred      in 1988 to,the     department.
    Acts 1987, 70th Leg.,       ch. 374, S 2, at      1855; j&     S 13,    at
    1873-74; see also Gov't       Code § 481.023(c).       Records     avail-
    able to    the   department    show    that the    TCC   did    not   pay
    $150,500    in   compensation      to   approximately      150     former
    employees,     participants,     and   contract    laborers     who   had
    performed   services under the TCC's job training program              and
    $215,000 to various vendors who had supplied the TCC program
    with goods     and services.      The legislature      has now     appro-
    priated money     to give    these individuals      the    compensation
    that they did not receive from the TCC.

          Article III,     section    44, of    the   Texas    Constitution
    prohibits   the legislature     from making grants of money out of
    the State Treasury,     by   appropriation    or otherwise,      "to   any
    individual,    on a claim, real       or pretended,      when the     same
    shall not, have      been   provided   for   by   pre-existing       1aw.Y
    Texas courts have consistently        interpreted   this provision       to
    mean that the     legislature    cannot appropriate       funds out      of
    the State Treasury to any .individual or private             corporation
    to satisfy a claim unless there         is already in force at         the
    time of the     appropriation    some valid     law   under which      the
    state courts would hold        the state liable      for the claim       in
    the event the state waives its immunity against suit.                Texas
    Public Bldcf. Auth. V.       Mattox, 686 S.W.2d 924,      929    (Tex.
    1985); Fort Worth Cavalrv Club         v. Sheovard,    83 S.W.2d 660,
    663 (Tex. 1935);      Austin Nat'1 Bank      v. SheDDard,     71 S.W.2d
242, 245 (Tex. 1934).        Thus the claims      to be satisfied        by
    the 1989 appropriations      must be legal and valid         obligations
    of the    state   enforceable     in the    courts    of   this    state.
    Attorney   General Opinions JM-970       (1988); JM-17 (1983).

          The requirement      that a claim        be supported     by   "pre-
    existing law"     may be     satisfied    by   reference   either    to   a
    valid state statute or to a provision           of the common law that
    is not    inconsistent    with    the Texas     Constitution    or   Texas
    statutes.    Texas Public Bids. Auth. v. Mattox, 686 S.W.Zd at
    929 (Tex. 1985); Austin Nat'1 Bank v. Sheooard, 71 S.W.2d at
    245-46 (Tex.     1934); State      v. Steck,      236 S.W.Zd    866,    869
    (Tex. Civ.     App.   - Austin       1951,    writ   ref'd).     A moral
    obligation   to    reimburse     a party      for   services    or   goods
    rendered    the    state     will   not    by     itself   satisfy      the
    "pre-existing    law" requirement      of    article III, section       44.
P

                                        P- 6222
    Mr.   William   D. Taylor   - Page   4     (JM-1181)

.

    w    Austin Nat'1 Bank       v. Sheooard, 71 S.W.2d at 245        (Tex.
    1934)(limiting     Kiloatrick     v.    Comoensation     Claim    Bd.,    259
S.W. 164, 167 (Tex. Civ. App.           - El Paso 1924, no writ),          to
    the extent it      suggests otherwise);       State     v. Perlstein,      79
S.W.2d 143, 147 (Tex. Civ. App. - Austin 1934, writ dism'd);
    Attorney   General Letter Advisory         No. 107 (1975).        Nor    will
    reimbursement     by the    state for     services or      goods be      held
    valid under article       III, section       44, on the     basis of      the
    common law right to quasi- contractual            recovery    -- the right
    to   recover     the   reasonable     value    of    services     or   goods
    provided     --   absent    either    statutory      or    constitutional
    authority    for   the state     to contract      for the     services     or
    goods and     actions by     the    state's agents       consistent      with
    their contractual       authority     including    all    limitations       on
    such    authority.      State    v.   Raaland     Clinic-Hosoital,        159
S.W.2d 105      (Tex. 1942)     (no   right to     recover      for medical
    services     provided    absent     express    or    implied      statutory
    authority    for   state    agent    to   make    contract      binding     on
    state): State v. Steck, 236 S.W.2d at      868-69 (no right         to
    recover reasonable       value for      goods    provided    in   a manner
    inconsistent     with either the      state constitution        or a    state
    statute);    State v. Haldeman,      163 S.W. 1020 (Tex. Civ. App. -
    Austin 1913, writ .ref'd) (no right to               recover payment        in
    excess of     amount    authorized    by    statute):     accord     Susman,
    Fiscal and Constitutional        Limitations,     44 Tex. L. Rev. 106,
    132-35 (1965).

          Under the facts presented         to us, we do not find a pre-
    existing statute      that would      authorize    the    state to     incur
    liabiiity   for the     third party      claims covered       by the    1989
    appropriations    to    the   department     and   the    Comptroller      of
    Public Accounts.      Nor have      you referred us       to such a pre-
    existing statute.       Although    the 1986 and 1987 contracts          are
    supported   by   the authorization        in the    Texas     Job-Training
    Partnership     Act    for   the    Texas    Department     of    Community
    Affairs to implement       and fund job-training       programs    pursuant
    to the federal legislation,         the Texas Job-Training         Partner-
    ship Act only      authorizes    the earlier      appropriation     by   the
    state of federal monies to fund the contracts              with the     TCC.
    Nothing    in that      act   either     expressly     or   by    necessary
    implication    authorizes     the    Texas Department       of    Community
    Affairs to reimburse       the third party claimants         for   services
    and goods    provided    to   the TCC.       See, e.a., V.T.C.S.        art.
    4413(52),   55 7(a) (criteria shall          be prescribed     for    selec-
    tion of    local    entities     to    administer     programs),       QA(a)
     (authority to contract with private nonprofit             corporations).
    We also find no express        or implied authority        for the     Texas
    Department   of Community     Affairs     to incur liability       for    the
    third party claims in the statute creating the Department                  of

                                             P. 6223
    Mr. William    D. Taylor    - Page   5   (JM-1181)

    Community    Affairs   and      listing     its  rights   and    duties.
    V.T.C.S.   art. 4413(201)      (emphasis    is on assistance  to   local
    governments).2

            Under the facts presented         to us, we do not find a pre-
    existing common-law          right that is consistent      with the narrow
    state      statutes      applicable    to    the   Texas   Department       of
    Community       Affairs and      its contracts with      the TCC and     that
    would therefore         impose liability     on the Texas Department        of
    Community       Affairs and thus the state for the claims in issue
    here.      For     instance, we     do not    find in    the statutes     any
    express or         implied authority      to   apply the     common-law     of
    third party beneficiaries            to the facts      of this case.      Nor
    have you referred          us to    a common-law    right    that would     be
    consistent       with the applicable      state statutes and would thus
    impose liability         on the state     in this case.      See,   Attorney
    General Opinion JM-618           (1987) (although existence       of common-
    law right ultimately           dependent   upon factual      determinations
    beyond the         opinion    process, availability       of   right    under
    article     III,    section 44 is issue capable of determination            as
    part of the opinion process).

          Absent either a pre-existing      .statute    or a   common-law
P
    right consistent    with the applicable    state statutes,     we' are
    constrained   to hold the 1989 appropriation       to the department
    and the    1989 appropriation      to the Comptroller      of   Public
    Accounts unconstitutional      under article III, section 44.        To
    do otherwise   could    result in unlimited     state liability      to
    third party    claimants     in the context     of   state    programs
    funded with federal or state funds.

          2.   Furthermore,   no   provision      of   the   1986   or   1987
    contract   indicates that     the Texas     Department     of  Community
    Affairs had an express contractual         or other legal obligation
    to the affected     third party     claimants.      In   fact both    the
    1986 and 1987 contracts      provide that the Texas Department          of
    Community   Affairs was not liable for any third party             claims
    that might be asserted     in connection      with the services to be
    performed   by the   TCC under the     contracts.       Both   contracts
    also provide that the Texas Department           of Community    Affairs
    was not    in   any way   liable    to the     TCC's    subcontractors.
    Finally, neither contract nor        any other facts presented          to
    us reveal   any contractual      or regulatory     control exerted      by
    the Texas Department     of Community Affairs over the TCC           that
    is unusual     in  the   context of     state     programs    funded    by
    federal grants.

                                          P. 6224
Mr. William    D. Taylor    - Page    6   (JM-1181)

      We also     conclude payment      of   the third     party    claims
pursuant   to   the 1989     appropriations      for payment     of   mis-
cellaneous    claims under     section 403.074       of the    Government
Code would violate       article III,      section 44,     of the    Texas
Constitution.      Section    403.074 authorizes       the   comptroller
to pay from     funds    appropriated    for    that   purpose     certain
miscellaneous      claims    for    which    appropriations      do     not
otherwise   exist.     The section prohibits      the preparation      of a
warrant for payment        of a claim unless the        claim has     been
"verified by the attorney         general as a legally       enforceable
obligation    of the state."      Gov't Code § 403.074(b)(2).

      Since we hold in this opinion that          there is no      "pre-
existing   law** to justify payment      of the third party      claims
and thus    that   such    claims    are  not   legally    enforceable
obligations   against the state, payment of those claims under
any 1989    appropriation,     including    the 1989   appropriations
for miscellaneous     claims, would violate article III, section
44.   Thus we    hold the    1989 appropriations      for payment     of
miscellaneous    claims    invalid to    the   extent that     they    in
conjunction   with the 1989      appropriation   for payment of      TCC
vendor claims authorize      payment of the third party claims in
issue here.

                           .SUMMARY

             The claims   of former   employees   and   con-
          tractors of   the  Texas   Conservation     Corps,
          Inc., are not legally enforceable     obligations
          against the state.   Thus the 1989     appropria-
          tions by the legislature   to pay those     claims
          violate the pre-existing    law requirement      of
          article III, section 44, of the Texas Consti-
          tution and are unconstitutional.

                                             JIM      MATTOX
                                             Attorney  General   of Texas

WARY KELLER
First Assistant     Attorney   General

LOU MCCREARY
Executive  Assistant     Attorney     General

                                      P. 6225
Mr. William   D. Taylor   - Page   7    (JM-1181)

JUDGE ZOLLJE STEAK-Y
Special Assistant  Attorney      General

RBNEA HICKS
Special Assistant    Attorney    General

RICK GILPIN
Chairman,  opinion   Committee

Prepared by Celeste A. Baker
Assistant Attorney General

                                   P.   6226