Court Opinion

ID: 4130240
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:01:56.93065+00
Date Added: 2024-06-11T14:31:54.990807
License: Public Domain

October 4, 1990

Honorable James L. Anderson, Jr.         Opinion No.   JM-1229
County Attorney
Aransas County, Texas                    Re:   Whether  county or
301 N. Live Oak                          state may provide   goods
Rockport, Texas 78382                    to   patron   prior    to
                                         receipt of payment;   re-
Ms. Kay Schlueter, Director              consideration of Attorney
State Law Library                        General   Opinion MW-461
Supreme Court Building                   (1982) (RQ-1922)
P-0.   Box   12367
Austin, Texas        78711-2367

Dear Mr. Anderson and Ms. Schlueter:

     Mr. Anderson asks whether Aransas County may sell gas
and fuel products at the county airport to individuals,
corporations, or the parks and Wildlife Department      on a
thirty day account whereby charges during the month are
billed at the end of the month.    Ms. Schlueter informs us
that the State Law Library receives many requests        from
patrons for next day delivery or telefacsimile  transmission
of photocopied materials available in the library. She asks
whether Attorney General Opinion MW-461 (1982) requires   the
library to receive payment before the copies are sent
instead of enclosing a bill with the copies.

     This office issued Attorney General Opinion MW-461   in
answer to an inquiry by the State purchasing and General
Services Commission  about its billing   for copies of bid
tabulations after they are sent out pursuant to open records
requirements.  The commission wished to accumulate   charges
during each month and send out bills at the end of the
month. The legal question addressed by the opinion was
whether the proposed system of billing would violate article
III, section 50, of the Texas Constitution, which provides
as follows:

                me Leaislature  shall have no aower to
             aive or to lend, or to auth rize the aivinq
             s-of                                  in aid
             of, or    to any   person, association    or

                                    Pa 6531
Honorable James L. Anderson, Jr. - Page 2   (JM-1229)
Ms. Kay Schlueter

        corporation, whether municipal  or other, or
        to pledge the credit of the State in any
        manner whatsoever,  for the payment   of the
        liabilities, present or prospective, of any
        individual,   association   of   individuals,
        municipal or other corporation whatsoever.

Tex. Const. art. III, S 50 (emphasis added).

     The opinion cited Letter Opinion R-2358 (1951), which
stated of article III, section 50, that '@[o]ur laws
contemplate, it seems, that State offices or enterprises,
the management of which requires the collection of public
funds or charges, should be operated on a cash basis.111
Attorney General Letter Opinion R-2358 at 4. "To defer the
payments of charges for copies of public records by means of
a monthly   billing  of the accumulated   charges," Attorney
General Opinion MN-461 determined,      was "just such    an
extension of the state's credit which is constitutionally
proscribed.*@2   Attorney  General Opinion MN-461,   at   2.

     1. Letter Opinion R-2358 (1951) is a letter written by
    assistant   attorney general    with the    hand-written
Zignation   1'R-23581'in the upper right-hand corner.    The
attorney general's name appears in the closing, followed by
a signature block for the attorney who wrote the letter.
Formal attorney general opinions issued in 1951 had a typed
opinion number, a heading describing the subject matter,    a
summary, and a list of the attorneys who approved        the
opinion. None of these indicia of a formal attorney general
opinion appear   in Letter Opinion R-2358.     See Attorney
General Opinion H-1063    (1977) at 3 (citat=       form of
R-1404).

      2. A resolution proposing  a constitutional  amendment
to allow the legislature   to authorize state agencies    to
defer   fees for services    was introduced    in the   71st
Legislature.  H.J.R. 94, 71st Leg. (1989). The resolution,
inspired by the issuance of Attorney General Opinion MN-461,
was not passed by the legislature.

     The legislature's failure to adopt H.J.R. 94 does not
establish that Attorney General Opinion MN-461 was correct,
or that a constitutional amendment is necessary to change
its holding.   See Texas TUrnDike   Auth v.      rmer
                                        iFootn%   Con%nuziy

                              p. 6532
Honorable James L. Anderson, Jr. - Page 3    (JM-1229)
Ms. Kay Schlueter

Accordingly, the Purchasing Commission could not institute
its proposed method of billing, unless it required a deposit
to cover the costs of copying records pursuant to section 11
of article 6525-17a, V.T.C.S.

     This office addressed a similar question in Attorney
General Opinion JM-533 (1986), which concluded that a county
officer would   lend the county's credit      in violation    of
article III, section 52, and article XI, section 3, of the
constitution   if he delivered     services to      individuals
associations,   or   corporations   for    deferred    payment.5
Article III, section 52, prohibits       the legislature    from
authorizing political   subdivisions    to lend their credit,
while article XI, section 3, directly prohibits counties and
other municipal corporations    from lending credit, and the
opinion determined   that these provisions     required   county
officers to provide services on a "cash only" basis.

     Attorney General Opinions MW-461 and JM-533   overlooked
authorities   holding   that the    state or    a   political
subdivision may lend credit to accomplish a public purpose.
In his analysis of article    III, section 50, of the Texas
Constitution,   Braden described   the "lending of credit"
language of this provision as saying that the state may not
aid anybody by providing him land, goods, or services      on
credit.  Braden, The Constitutionof             of Texas: An
Annotated and Comnarative Analvsis 225 (1977). He concluded
that if the current   interpretation of article III, section
51, is correct,    "it follows that today Section       50 is
applicable only if the credit is for a private purpose."
m    Section 51 provides that the legislature "shall have no
power to make any grant or authorize the making of any grant
of public moneys"     to   any individual, association     of
individuals, or corporation.   The current interpretation  of
this provision,   as given in Braden's analysis thereof,
prohibits grants   for private purposes,   but not those to

(Footnote Continued)
S.W.2d 302, 305 (Tex. 1955); Friedman   . American Suretv Co.
 f New York 151 S.W.2d 570, 580       (Gex 1941): see also
ittorney Gen&al Opinion JM-1102 (1989) at 8.

     3. Attorney General Opinion JM-533 (1986) found an
exception to the "lending of credit" provisions where some
other constitutional provision, such as article I, section
13, required a county officer to provide services without
requiring immediate payment.

                                p. 6533
Honorable James L. Anderson, Jr. - Page 4   (JM-1229)
MS. Kay Schlueter

accomplish  public purposes,    if sufficient   controls   are
placed on the transaction to ensure that the public purpose
is carried out.    Braden, m     at 232-35 (and authorities
cited); ~88 Barrinaton v. Cokinos, 338 S.W.Zd 133, 140 (Tex.
1960); se   also State v. c       of Austu    331 S.W.2d 737
(Tex. 196:): Davis   . Citv of Lubbock 326'S.W.2d 699    (Tex.
1959); Attorney Genzral Opinion JM-62; (1987).

     In State  v. CitY Of Au tb   331 S.W.2d 737 (Tex. 1960),
the supreme court addressid     ' number of constitutional
issues pertaining    to articlea 6674w-4, V.T.C.S.,     which
provides for the relocation   of utility facilities at state
expense whenever   the relocations is necessitated   "by the
improvement   of any highway     in this State which      has
been . . . established . . . as a part of the        National
System of Interstate    and Defense Highways . . . provided
that such relocation is eligible for Federal participation."
The terms of federal reimbursement to the state are set
forth in title 23, section   123, of the United States Code.
&   State v. City Of Dallas, 319 S.W.2d 767, 772 (Tex. Civ.
APP. - Austin 1958), aff'd 331 S.W.2d 737 (Tex. 1960).
oenerally Attorney   General Opinion JM-105    (1983) (caE
television as a utility within article 6674w-4, V.T.C.S.).

     In addressing the state#s argument that payment of the
relocation costs would constitute   a gift or loan of the
credit of the state in violation of article III, section 50,
the supreme court opinion in State v. Citv of Austin  stated
as follows:

           Article 6674w-4 obviouslv does not involve
        a aift or loan of the credit of the state
        unless  it can be said that payment        of
        relocation costs amounts.to a grant of public
        money in violation of Article III, Section
        51. The purpose of     this section and of
        Article XVI, Section 6, of the Constitution
        is to prevent the application of public funds
        to private purposes.
331 S.W.2d at 742 (emphasis added). The supreme court, like
Braden, applies the same "public purpose" test to determine
the validity of a transaction under article 111, section 50,
and article III, section 51, of the constitution.

     In Brazoriaq                  537 S.W.2d 89 (Tex. Civ.
APP. - Houston [lst Dist.] 1976,'no writ), the county sued a
former deputy sheriff under a promissory   note whereby  the
deputy agreed to repay county funds spent on training him if

                               P. 6534
    Honorable James L. Anderson, Jr. - Page 5   (J&1229)
    Ms. Kay Schlueter

    he did not serve for two years after completing    training.
    The central issue was whether there was a lending of credit
    by the county in violation of article III, section 52, of
    the constitution.  The court found no violation, stating  as
    follows:

               The clear purpose of this constitutional
            provision   is to    prevent  the   gratuitous
            application of funds to private use.        The
            Constitution does not, however, invalidate an
            expenditure   which incidentally   benefits   a
            private interest if it is made for the direct
            accomplishment    of   a   legitimate   public
            purpose.
537 S.W.2d at 90-91  (citations omitted); see also Attorney
    General Opinion H-1010 (1977).    Thus, a "loan of credit"
    does not violate the constitution      if it is made     to
    accomplish a public purpose.

         Opinions of this office issued since Attorney   General
    Opinion MW-461 have treated      extensions   of credit
    constitutional  if they met the "public purpose"        tes?
P   Attorney General Opinion JM-274   (1984) stated that article
    III, section   52(a), prohibits    the use by a political
    subdivision of its public    funds or credit     for private
    purposes and concluded as follows:

            Any lending of credit must be intended to
            accomplish an authorized  county purpose  and
            must be accompanied  by conditions to ensure
            the use of county credit for a         public
            purpose.

    Attorney General Opinion JM-274 at 2-3.

         Attorney  General Opinion JM-1030     (1989) considered
    whether the Texas Department   of Mental Health and Mental
    Retardation could make advance payment of start-up costs to
    private entities that had contracted to provide services to
    clients of the department.  Start-up costs could be used to
    purchase and renovate space in which to provide    services,
    purchase furniture, and pay other costs associated with the
    preparation to provide services. Thus, the department would
    be transferring funds to the contractor well in advance of
    its provision of services to the department's clients.

         The reguestor asked whether advance payment of start-up
    costs to a private entity might contravene the prohibition
r

                                   p. 6535
Honorable James L. Anderson, Jr. - Page 6    (JM-1229)
Ws. Kay Schlueter

against the grant of public credit in section 50 of article
III or the prohibition against the grant of public monies in
section 51. The opinion took note of several opinions      that
approved the advance payment     of public funds to private
parties for the achievement      of a public purpose.
Attorney General Opinions IN-423 (1982) (grant to privE
museum honoring   firefighters,   subject to condition     that
museum remain open long enough for public to receive benefit
of grant): H-1010 (1977) (payment of medical        tuition as
partial compensation for promise that student will practice
medicine   in county); H-74     (1973) (prepayment of state
employees* authorized travel expenses): see also State ex
Tel. Grimes County Tamavers Ass'n v. Texas MUniCiDal      Power
Aaence, 565 S.W.2d 258 (Tex. Civ. App. - Houston [lst Dist.]
1978, writ dismjd w.o.j.) (test for validity of transactions
between governmental entities    in which one renders    agreed
services to the other in exchange       for money paid at a
different time); V.T.C.S. art. 601b, 0 3.24 (state agencies
may pay in advance    for goods purchased from federal and
state agencies     where   advance payment     will    expedite
delivery):   Attorney General Opinion H-1033 (1977) (sale of
accounts receivable from patients by county hospital).

     The opinion concluded that the department    could pay
"start-up costs" to private entities, provided     that the
public receive adequate consideration and the governmental
body retained  enough control over the expenditure of the
funds to assure that the public purpose of providing  mental
health/mental retardation  services was actually met.      A
requirement that advances be repaid was discussed      as a
possible, although not necessarily    exclusive,  method  of
control.   If repayment were required, the transfer    would
take the form of a loan rather than a grant.

     Based on the authorities   cited, we conclude   that a
lending of credit will not violate   the constitution if it
accomplishes  a public purpose     and is accompanied     by
conditions to ensure the use of governmental credit for a
public purpose. Accordingly,   a state or local entity may
provide services to a private person or entity in advance of
receiving payment  if a public purpose will thereby       be
accomplished and if it places sufficient    controls on the
transaction to insure that the public purpose will be
carried out. Attorney General Opinions WW-461 and JW-533
are overruled to the extent that they hold the contrary.

     The determination that a particular extension of credit
meets the constitutional    requirements  is in the first
instance within the sound discretion of the governing  body,

                                p. 6536
    Honorable James L. Anderson, Jr. - Page 7   (JK-1229)
c   Ms. Kay Schlueter

    subject to judicial review. See. e.a    D dson v    Marshall
    118 S.W.2d 621    (Tex. App. - Waco "19:8,    writ dism'd);
    Attorney General Opinions JW-1030 (1989); JM-551      (1986);
    WW-423 (1982); H-1260 (1978). Mr. Anderson informs us that
    Aransas County has installed a new gas dispensing         and
    payment system which would allow a person to buy airplane
    fuel twenty-four hours a day and use an approved credit card
    for payment.   Several entities, including the Texas Parks
    and Wildlife Department, wish to be issued a special card
    for the fuel dispensing    facilities and be billed     on a
    monthly basis.    You do not  indicate what  public   purpose
    would be served by this arrangement.      The commissioners
    court should determine in the first instance whether such an
    extension of credit would meet constitutional requirements.

         With respect to the inquiry of the State Law Library,
    however, its request letter and the remarks of the State
    Purchasing and General Services Commission noted in Attorney
    General Opinion WW-461 provide some information     as to the
    public purpose that might be served by providing copies of
    documents to individuals in advance of payment. The State
    Law Library "may be used by the members and staff of the
    supreme court, court of criminal appeals, the office of the
    attorney general, and other state entities and by citizens
    of the state." Gov't Code 5 91.002(b). The letter from the
    library states that its patrons request next day delivery or
    telefacsimile transmission of photocopies because they are
    in a hurry for the information.     When they do not have the
    time to send the money      first, the library is forced to
    either send the information without charge or not send it at
    all. &&R V.T.C.S. art. 6252-17a, § 9 (charges for copies of
    documents    under    the    Open   Records   Act):    General
    Appropriations Act, Acts 1989, 7lst Leg., ch. 1263, at 5705
    (fee schedule    for   duplication   services at State      Law
    Library). Attorney General Opinion WW-461 noted that the
    State Purchasing     and General Services Commission      might
    benefit from reduced administrative    costs if it billed   for
    documents on a monthly basis.

         The library might be able to operate more efficiently
    and reduce administrative costs by billing on a delayed
    basis.   In determining whether a public purpose        will
    actually be served by permitting      delayed payment,   the
    library can balance its savings in administrative costs and
    in fees collected that would otherwise be waived     against
    possible losses through default of payment. The library has
    an effective means of control over such transactions in that
    it can require a deposit or advance payment by a patron who
    has defaulted on payment in the past. We conclude that the

                                    p. 6537
Honorable James L. Anderson, Jr. - Page 8       (JM-1229)
Ms. Kay Schlueter

library may constitutionally   bill patrons   for copies of
documents sent in advance of payment. The details of such a
plan, including the controls necessary    to carry out its
public purpose, are for the library administrators.

                       SUMMARY
             A lending of credit that accomplishes   a
        public purpose and is accompanied by controls
        that ensure the use of public credit for a
        public purpose does not violate article   111,
        sections 50 and 52, or article XI, section 3,
        of the Texas Constitution.  The determination
        that a particular  extension of credit meets
        the constitutional  requirements  is in the
        first instance within the sound discretion of
        the governing   body, subject to     judicial
        review.   Attorney  General Opinions MN-461
        (1982) and JM-533 (1986) are overruled to the
        extent they hold the contrary.

                                    -
                                        JIM     MATTOX
                                        Attorney General of Texas

MARYKELLER
First Assistant Attorney General

mu MCCREARY
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General

RENEA HICKS
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Susan Garrison
Assistant Attorney General

                                 p. 6538