                                The Attorney        General of Texas
                                               November   15,   1977
JOHN L.HlLL
Attorney General


                           Mr. B. L. DeBerry                           Opinion No. H-1091
                           Engineer-Director
                           State Department of Highways                He: Validity of leases
                             & Public Transportation                   of property owned by the
                           Austin, Texas 78701                         Texas Turnpike Authority.

                           Dear Mr. DeBerry:

                                You have requested our opinion regarding the validity
                           of certain leases on property owned by the Texas Turnpike
                           Authority.

                                In 1964, the Texas Turnpike Authority entered into
                           two lease contracts for the operation of motel and restau-
                           rant facilities on right-of-way adjoining the Dallas-Fort
                           Worth Turnpike. Each lease purports to run for a primary
                           term ending in 1995, and each lessee is granted an option
                           to renew for an additional 20-year period. It is undisputed
                           that the Turnpike Authority was empowered to lease its right-
                           of-way for hotel and restaurant purposes under the provisions
                           of section 12 of article 6674v, V.T.C.S. Arlington Hotel &
                           Motel Ass'n v. Howard Johnson, Inc. of Texas, 397 S.W.2d 555,
                           557 (Tex. Civ. App. -- Fort Worth 1965, writ ref'd n.r.e.1.

                                Section 19 of article 6674~ provides, in pertinent part:

                                       When all bonds issued under the provisions
                                     of this Act in connection with any Turnpike
                                     Project, and the interest thereon shall have
                                     been paid or a sufficient amount for the
AnEqual Oppon”“ity                   payment of all such bonds and the interest
A”iml.ti”*ActionEmployer
                                     thereon to the maturity thereof or for the
                                     redemption thereof, shall have been set
                                     aside in trust for the benefit of the bond-
                                     holders, such Project, if then in good con-
                                     dition and repair to the satisfaction of the
                                     State Highway Commission, shall become part
                                     of the State Highway Commission and shall
                                     thereafter be~maintained by the State High-
                                     way Commission, free of tolls . . . . When
                                     the bonds issued to finance a Turnpike




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Mr. B. L. DeBerry   - Page 2      (H-1091)



          Project are fully paid and the Turnpike
          Project has been accepted by the State
          Highway Commission as provided for in this
          Section 19, within one (1) year from date
          of acceptance of said Project, including
          all the installations thereon, excepting
          only the road bed and highway sections, the
          State Highway Department shall advertise
          for public sale all of said installations
          which may have been acquired as provided
          in Section 12 hereof, and shall receive
          sealed bids therefor. It may reject any
          or all bids but shall dispose of all such
          properties within two (2) years after
          accepting title to the Turnpike Project.

The 65th Legislature recently added section 17a to article 6674v,
directing that the Dallas-Fort Worth Turnpike shall become toll
free by December 31, 1977, and requiring that the Authority

          effectuate a plan for an orderly transi-
          tion of the Dallas-Fort Worth Turnpike
          to the State Department of Highways and
          Public Transportation on the date when
          tolls are lifted.

Acts 1977, 65th Leg., ch. 97, at 196. You state that final
redemption of outstanding bonds is presently scheduled for
January 2, 1978, and that the facility is expected to be trans-
ferred to the Department on that date. You first ask whether
the leases previously executed by the Turnpike Authority will
remain in effect thereafter.

     Both of the lease contracts contain the following language:

          Lessor's title and covenants result from
          the authorization in Article 6674v, Vernon's
          Revised Civil Statutes of Texas, being
          Chapter 410, Acts of 1953, Fifty-Third
          Legislature of the State of Texas, Regular
          Session; and the terms of certain Trust
          Agreement securing the Dallas-Fort Worth
          Turnpike Project bonds issued pursuant to
          such Article 6674v, and Lessor's covenants
          extend only to the extent of the obliga-
          tions lawfullv wermitted Lessor under said
          Act and said Trust Indenture, and the fore-
          going covenants and warranties shall not be
          construed so as to extend beyond the date




                               p. 4483
Mr.   B. L. DeBerry   - Page 3   (H-1091)



           of payment or lawful provision for payment
           of all presently outstanding or hereafter
           authorized and issued Turnpike Revenue Bonds.

 (Emphasis added). In our opinion, this limitation extends to
each of the "covenants" made by lessor, including the designa-
tion of the primary term of the lease and the option to renew.
Whether or not this result is required by the provisions of
article 6674v, we believe it is compelled by the clear language
of the lease itself. Accordingly, the leases at issue here
must be held to terminate upon the redemption of all outstand-
ing Turnpike Revenue bonds.

     You also ask whether the Department may sell the motel
tract "upon the basis that the State of Texas holds fee simple
title to the entire premises."  The Texas Turnpike Authority is
a state agency, and holds all property as an agent of the State
of Texas. Dobbins v. Texas Turnpike Authority, 496 S.W.Zd
744, 747,(Tex. Civ. App. -- Texarkana 1973, writ ref'd n.r.e.).
Article 1291, V.T.C.S., provides:

             Every estate in lands which shall . . .
           be granted, conveyed or devised to one
           although other words heretofore necessary
           at common law to transfer an estate in fee
           simple be not added, shall be deemed fee
           simple, if a less estate be not limited by
           express words or do not appear to have been
           granted, conveyed or devised by construction
           or operation of law.

Both of the leases under consideration here recite that the
Turnpike Authority "is seized in fee to the title" of the
property, and no evidence has been presented which would sup-
port a contrary view. Since the Authority, as agent for the
State of Texas, presently holds title to the motel tract in
fee simple, the Department, after transfer, will likewise hold
title in fee simple and may sell the tract on that basis.

     Your final question is whether the Department may adver-
tise the tracts for sale prior to the time it assumes custody
thereof. Section 19 requires the Department to advertise turn-
pike installations for public sale after a "Turnpike Project
has been accepted by the State Highway Commission," and t0 do
so within one year thereof. We do not believe that the language
of section 19 can be construed to permit such advertising prior
to the date on which the Department assumes custody of the pro-
ject. In our opinion, therefore, the Department may not adver-
tise the tracts in question for sale until after the Department
has assumed custody of the Dallas-Fort Worth Turnpike.



                            p. 4484
Mr. B. L. DeBerry    - Page 4     (H-1091)



                        SUMMARY

            Lease contracts executed by the Texas
            Turnpike Authority regarding hotel and
            restaurant facilities on the Dallas-
            Fort Worth Turnpike terminate upon the
            redemption of all outstanding Turnpike
            Revenue bonds. Aftertransfer   of the
            Dallas-Fort Worth Turnpike Project to the
            State Department of Highways and Public
            Transportation, the Department may sell
            the installations on the basis that the
            State of Texas holds fee simple title
            thereto. The Department may not advertise
            the tracts for sale until after it has
            assumed custody of the Turnpike Project.




APPROVED:




DAVID M. KENDALL, First Assistant




C. ROBERT HEATH, Chairman
Opinion Committee

jst




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