Honorable   E. R. Gregg
Chairman,   Board of Managers
Texas State Railroad
Rusk, Texas

Dear   Mr.   Gregg:            ,          Opinion    No.    O-5728

                                          Re:    Whether     or not the Board of
                                                 Managers      of the Texas State Rail-
                                                 road has the authority       to enter into
                                                 a contract    with a private     auditor
                                                for an audit of accounts        between
                                                Texas State Railroad       and the New
                                                Orleans     Railroad.

             You   make   the following    request    for   an opinion,   to-wit:

            “The Board of Managers           of the Texas State Railroad,          of
   which body I am chairman,            recently    caused     an audit to be made
   through     the office    of the State Auditor.       This audit was not corn-
   plete and was not made by parties             familiar     with the auditing     of
   railroad     matters.      Since receiving     this audit and going over it
   carefully     and after having conferred         with men whom we consider
   capable     of making an audit of the matters            between     the Texas
   State Railroad       and the New Orleans        Railroad,       we are convinced
   that a comp@te         audit should be made.         It is our opinion that we
   can make a contract          with such a party, or parties,           which will not
   involve    the State in so far as expense          is concerned;       in other words,
   we can make this,contract           on a contingent       basis,   the auditor   re-
   ceiving    his remuneration       out of the amount,         if any, recovered      from
   the T & N 0 Railroad.

           “I will appreciate    it very much if you will let me have the
   opinion   of your office   as to whether     or not the Board of Managers
   of the Texas State Railroad        is authorized,   under the Act creating
   it, to make a contract     as stated above.“’
                                                                                            --       .




Honorable      E. R. Gregg,     Page    2     O-5728




           The Board of Managers      for the Texas State Railroad        was created
by Senate Bill No. 267, Chapter     26, General    Laws,   37th Legislature,    Regu-
lar Session.    This Act was amended      by the passage    of Senate Bill No. 14,
Chapter   4, at the Second Called Session     of the same Legislature.        The orig-
inal Act has been further   amended     by the passage   of Senate Bill No. 69,
Chapter   3, at the Regular Session    of the 38th Legislature     (1923).

              The powers    of the Board,      as the same       have   been   amended,      are,
insofar     as pertinent,   as follows:

             “SEC. 2. Immediately        after the taking effect of this Act it
    shall be the duty of the Board of Prison            Commissioners       of the
    State of Texas,     upon demand of the Board of Managers              of the
    Texas State Railroad,       to deliver    the possession     of said railroad,
    together    with all equipment,     supplies,     chases,  books,   records
    and documents       of every character,       and all property    of whatever
    kind belonging     to the said Railroad,       to the Board of Managers,
    created    by this Act.

             “SEC. 3. The Board of Managers                 is hereby      authorized,
    upon approval        of the Governor       of the State of Texas,          and given
    full authority     to sell or lease said railroad            for the highest       amount
    and upon the best terms            obtainable,    to any person,        firm,   or corpora-
    tion, and in the event said Railroad             is sold to execute         and deliver     to
    the purchaser        thereof    a deed to the right of way and to all other
    lands owned by the State of Texas and used in connection                         with said
    railroad    and to do any and all things, necessary                to convey     the title
    of said railroad        right of way, rolling       stock, and all other property
    and chases      of whatever       kind belonging      to said railroad        to the pur-
    chaser,    and in the event the Board of Managers                   shall lease said
    railroad,    it shall have the authority         to execute       such a lease agree-
    ment as it may deem to the best interest                  and welfare       of the State
    of Texas,     subject,     however,     to the approval       of the Governor        of the
    State of Texas;        provided     that in the event of the sale of said railroad
    the proceeds       thereof     shall be first applied       to the payment        of the bonds
    and accrued       interest     thereon,   owned by the Public School              Fund of the
    State of Texas and against            said railroad.       Any balance        shall be paid
    into the Treasury          of the State.

            “SEC. 4. If the Board of Managers     cannot sell said railroad
    or lease the same to an advantage,     then it is hereby  authorized   to
    continue   to operate  the same upon the most economical      bases poss-
    ible, and until such time as the Board may be able to find a satisfac-
    tory purchaser     for said railroad or lease the same to an advantage,
Honorable    E. R. Gregg,     Page   3    O-5728




    and for the purpose        of rehabilitating     said railroad     and putting the
    same in shape so that traffic           may move over the same in safety,
    there is hereby      appropriated       out of any funds in the State Treas-
    ury not otherwise        appropriated,     the sum of Twenty-five         Thousand
    ($25,000.00)     Dollars     to be used in the payment        for repairs    and oper-
    ation from the date of the taking effect            of this Act, which with the op-
    erating   revenue     derived    from the railroad,       to be paid by warrants
    drawn upon the State Treasury,             by the Comptroller       upon order     of
    the Board of Managers.           And said Board of Managers            shall have at
    their disposal     for the purpose       of improving     and repairing     said
    Texas Railroad,       fifty (50) able-bodied       convicts   to be furnished     by
    the Prison    Commission        of Texas,     and to be used at any time during
    the first year of said management             of said Texas Railroad        by the
    Board of Managers,         created     by this Bill.    The Board of Managers
    are hereby     directed    to make report       of their action in the premises
    to the next Called Session          of the Thirty-seventh       (37th) Legislature.

           “SEC.   5. Such Board of Managers          shall make reports     to the
   Comptroller     of all receipts,    expenditures    and disbursements,      which
   reports   shall be prepared      not later than the tenth (10th) day of each
   month and shall cover        the operations    of said railroad  for the preced-
   ing calendar    month.     They shall be accompanied        by a remittance     to
   the Comptroller       of all monies    so received    by such Board    of Managers
   in the course    of its operations     during such month.

           “SEC. 6. All disbursements         and payments      of every nature what-
   soever,   including  interline   balances    shall be paid by warrant        of the
   Comptroller     upon the Treasury      drawn by him upon due order           of the
   Board of Managers.       Interline   balances     shall be carried    by the Comp-
   troller  as a separate    trust fund for the benefit      of connecting    lines en-
   titled to revenue   funds collected     by said railroad.

           “SEC. 7. All current funds received     by the Board of Managers
   or any station agent of such railroad   shall be forthwith   transmitted
   to such State Bank as may be designated      by the Board of Managers    as
   a depository  of such funds. Remittance     of such funds to the Comptrol-
   ler shall be made by the check of the Chairman       of the Board of Managers
   upon such bank.

           “SEC. 8. Such Board of Managers       shall make full report   of any
   sale or lease of such railroad   to the Governor.    In case of the opera-
   tion of such railroad  by such Board,   full reports  of all expenses,   dis-
   bursements    and income  shall be made by it to the Governor,      on the
Honorable     E. R. Gregg,       Page    4    O-5728




 first days of July and January      of each year.  In case of the lease of
 such railroad   the rentals   shall be collected  and audited by the Board,
 and a full report  thereof  likewise    made to the Governor   semi-annual-
 ly.

        “The Governor           shall submit all such         reports   to the Legislature
 at each Session  next        succeeding   the receipts         thereof   by him.”

          “Section    3a. In addition     to the powers     otherwise      vested in said
 Board of Managers         with respect     to the Texas State Railroad,         said
 Board of Managers         is hereby    authorized     and empowered         to make and
 enter into any other contract          or contracts,    agreement       or agreements
 with respect      to said railroad,     or any property,      right, franchise,      privi-
 lege, or other matter        or thing belonging      thereto    or constituting     any
 part thereof,     and not inconsistent      with law, whether        of sale, option of
 sale, trackage      agreement,      or of any other nature or character           whatso-
 ever, as in the judgment        of the Board of Managers           will be to the best
 interest   of said railroad,     ,the people and interests        to be served     thereby,
 and the State.

            “Section     7a. Any money accruing             or arising      on account     of said
  railroad     shall be applied      in the discharge          or payment       of such indebted-
 ness,     claims     or demands      as may have accrued             or arisen      on account     of
  said Texas State Railroad            since March         12, 1921, and as may be author-
  ized by law to be paid therefrom,               including      personal     expenses     actually
 and necessarily          incurred   by any member            of the Board of Managers            in
 the discharge         of his duties as such, such clerical               or other help or em-
 ployment       as in the judgment         of the Board of Managers              it may be neces-
 sary to incur in properly            handling,      caring    for, managing        and otherwise
 transacting       any duty or business          arising     on account      of or by reason       of
 s&d Texas State Railroad,              as well as any other cost or expense                 properly
 and necessarily          incurred   by said Board of Managers                with respect      to the
 duties enjoined         upon it by law concerning            said railroad;       and should there
 at any time be on hand a sum of money which in the judgment                              of the Board
 of Managers         is in excess    of the amount necessary               to meet such disburse-
 ments,      payment      or expenditures       with respect        to said railroad      as are au-
 thorized      by law, said Board of Managers                is authorized       to apply such ex-
 cess to the payment           of matured      interest     coupons     representing       the inter-
 est due on the bonds of said railroad                  that are owned by the public free
 school     fund of this State, and after discharging                 such interest      as may from
 time to time be due on said bonds,                 any amount of such excess             thereafter
 remaining        on hand may be applied           to the payment        of said bonds as they
 have or may mature,             such payments         to be made by warrants            drawn by
 the Coroptroller         upon order      of the board.af,managers.”
    Honorable    E. R. Gregg,        Page   5   O-5728




            No State officer,   board or representative       of the State whatsoever,    has
    any authority     as a mere incident   to his position   to make contracts     on behalf
    of the State, or to convey     away State property.      Such power must be conferred
    by statute,   either expressly    or by necessary     implication,   and implications    with
    respect   to such powers     are not favored.

            We find nothing       in the statutes creating    or regulating   the Board of Texas
    State Railroa’d    conferring     upon the Board power to do what you suggest         -- that
    is, to enter &to a contract         with an auditor  upon a contingent-fee     basis, payable
    out of any sum recovered          by the State through    such audit.   Such recovery    would
    necessarily     be public funds -- the property        of the State -- and such contract
    would be void.

              Furthermore,   we have been unable to find where the Legislature        has
    made any character       of appropriation  in favor of the Board for the last several
    bienniums      without which your Board would have no authority      to incur a State
    liability   in any event, but we do not put our decision    upon that ground,   since
    the ground first stated is sufficient,    and is a specific  answer   to your inquiry.

           You are therefore respectfully           advised  that the contract       of employment
    mentioned  by you may not be entered            into by your Board.

                                                             Very    truly   yours

                                                         ATTORNEYGENERALOFTEXAS




                                                                    Ocie Sp;er
                                                                    Assistant
         ROVED     DEC    9   1943



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    FIRST ASSISTANT
    ATTORNEY    GENERAL
                                                                APPROVED
                                                                Opinion


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