.   ,




                                                   Partly overruled by
                                                   Trinity Universal Ins. Co. v.
                           Ausxmv     nl.Ta!zxas   J. C. McLau hlin, et al
                                                   373 SW 2d 62
                                    June 7, 1963




        Honorable D. C. Greer
        State Highway Engineer
        Texas HighwiayDepartment
        Austin, Texas
                                            Opinion Ho. C-96
                                     Re:    Whether the Highway Department
                                            may dispense with the require-
                                            ment that the contractor fur-
                                            nish an affidavit of bills paid
                                            prior to making final payment
                                            by virtue of Senate Bill 213.
        Dear Hr. Greer:
             Your request for an opinion recitea that on April 26, 1963,
        Senate Bill 213 was signed into law by the Governor and went into
        immediate effect. This bill deleted that portion of Article 6674m,
        Vernon's Civil Statutes, that stated:
             "and final payment shall not be made until it is shown
             that all sums of money due for any labor, materials,
             or equipment furnished for the purpoae of such improve-
             ments made under any such contract have been paid."
            You have submitted to us a request for our opinion on the
        following questions:
             "1. Hay this Department dispense with the requirement
             that the contractor furnish an affidavit of bills paid
             prior to making final payment?"'
             "2. Hay this Department now make final payment to con-
             tractors on jobs completed in the past where no such
             affidavit was furnished?"
             n3. ‘.      In the event your answer to Question No. 2
             is in t~e'afflrmatlve,please advise us whether or not:

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Honorable D. C. Greer, Page 2   (C-96)


          “a.  The State may pay the money retained on
          these contracts directly to surety by warrant
          iaaued in aurety'8 name."
          "ba The State or any of the officials Involved
          would be liable to surety if payment were made
          to the contractor.”

     Aa early aa 1857, the Texas Supreme Court held in The State
v. Andrews, 20 Tex. 230, that where an amendatory act of the legia-
lature reads that a certaln,aectionof a previous act shall here-
after read aa follows, any provision of the previous act which is
not found in the emendatory act ia repealed.
     In Texas Farm Bureau Cotton AssIn v. Lennox, 296 S.W. 325
(Tex.Clv.App.1927), the Court was concerned with an amendatory
act regardLng jurisdictionand held:
     "The present act, an amendatorystatute . . . declares
     that the earlfer act . . . ehall be ‘amended80 as to
     read a8 follows.' From this it follows that the legla-
     latlve Intentionwas a recasting of the whole language
     of the earlier article.         In effect, all such por-
     tions of the original a8 &i omitted from the amendatory
     act are abrogated thereby and are thereafter no part of
     the statute. State v. Andrews, 20 Tex. 230."
     Senate Bill 213 states as follows:
     "Section 1. That Section 13 of Chapter 186, Acts of
     1925, 39th DegirrlatureRegular Sesaion  (Article 667481,
     Revised Civil Statutesj be amended 80 that It shall
     hereafter read aa follows:
     "Section 13. Said contractsmay provide for partial
     payments to an amount not exceeding ninety-fiveper
     cent 95 ) of the value of the work done. Five per
     cent tB
           5 ) of the contract price shall be retained un-
     tll the entire work haa been completed and accepted."
     Inasmuch aa the legislatureamended Article 6674m, Vernon'6
Civil Statutes, and deleted that portion which stated:
     "And final payment shall not be made until It is ahown
     that all 8ums of money due for labor, materials, or
     equipment furnished for the purpose of such improve-
     ments made under any such contract have been paid,"

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Honorable D. C. Greer, Page 3   (C-96)


It Is our opinion that the legislatureIntended that such requlre-
ment no longer be mandatory upon the Texas Highway Department and
that the remaining five per cent (5%) of the contract price be re-
tained until such time when the work has been completed and
accepted.
     Since your first question directed to us Is "ma this Depart-
ment dispense wlth,the requirementthat,the contrac -3or furnish an
affidavit of bills paid prior to making final ayment?", your
attention is directed to Article 6674k and 667f 1, Vernon's Civil
Statutes:
     "Article 6674k. Form of contract
     "The State Highway Commission shall prescribe the form
     of such contracts and may Include therein euch matters
     aa they may deem advantageousto the State. Such forms
     shall be uniform, a8 near as may be."
     "Article66741. Signing contracts
    "Every such contract for highway Improvementunder the
    provisions of this act shall be made In the name of the
    State of Texas; signed by the State Highway Engineer,
    approved by at least two members of the State Highway
    Commission and signed by the contractingparty, and no
    such contract shall be entered Into which will create a
    liability on the part of the State In excess of funds
    available forexpenditure under the terma of this Act."
     In Johnson v. Ferguson, 55 S.W.2d 153, (Tex.Civ.App.1932,
error dism.), the Court said:
     "To the members of the~commlsslonand in large measure
     to Its chief engineer are intruated responslbllltleeof
     outstanding Importance. To meet these responalbillties
     they are invested with a wide discretion.      . Their
     acts in the exercise of an honest dlscretio&'must be
     respected when untainted by fraud and unassailed on
     account of accident or mistake occurring in their per-
     formance, or such abuse of discretion as under the
     authoritieswould avoid the same."
     It Is our opinion that although It is no longer mandatory
that the State Highway Department require an affidavit of bills
paid from the contractor,it may, In the discretion of the State
Highway Commission,require all contractorsto furnish such an

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Honorable D. C. Greer, Page 4   (C-96)


affidavit. This requirement could be included in the contract
If the Texas Highway Commission deemed such matter to be advan-
tageous to the State.
     With respect to your second question regarding final pay-
ments to contractorson jobs completed in the past where no such
affidavit of bills paid was furnished,the law seems to be well
settled that statutes which subsist at the time and place of the
making of a contract enter Into it and form a part of It as if
such statutes were exoreaaly referred to or incorwrated in lta
#----: Winder Bros. ;. Sterling, 118 Tex. 268, &S.W.2d 127,
terms

     In the case of Smith v. Elliott & Deats, 39 Tex. 201,
(1873), the Court said:
    "That the laws which exist at the time and place of the
    making of a contract enter into and form a part of It,
    embracing alike thoae which affect Its validity, its
    construction,Its dlacharge, and Its enforcement,forms
    a rule reconnlzedby numerous authoritiesof the hlnhest
    character .-. Van-Hoffman v. City of Quincy, 4 Wail
    550 . * * In the case of Von Hoffman v, City of Qulncy,
    above cited, Mr. Justice Swayne says: 'It is also
    settled that the laws which subsist at the time and place
    of the making of a contract, and where It Is to be per-
    formed, enter into ti$fOI'?na'part.of It as if.they were
    expressly referred to, or incorporatedIn Its terms.'"
     In regard to the contracts entered Into prior to Senate Bill
213, such contracts were executed at a time when by statute it was
mandatory that an affidavit of bills paid be furnishedby the con-
tractor prior to the payment of the remaining five per cent (5%).
Therefore, in answer to your second question It is our opinion
that on contracts executed prior to the date Senate Bill 213 became
effective the existing law required the contractorsto furnish
proof that all bills had been paid, that such law became a part of
the contracts and that the Texas Highway Department cannot now make
final payment to contractorson such contractsuntil such time that
proof of payment of all bills has been furnished.
     Inasmuch as your request for an opinion on questions 3.a and
 .b was contingent on an affirmativeanswer to question number two
 2), these questions are not answered herein.

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.   .   c




            Honorable D. C. Greer, Page 5 (C-96)


                                            SUGARY
                        Senate Bill 213 which was signed Into law
                        on April 26, 1963, and which amended Article
                        6674m, Vernon's Civil Statutes, no longer
                        makes it mandatory that the Texas Highway
                        Department require an affidavit from con-
                        tractors that all bills have been paid.
                        However, all contracts executed after April
                        26, 1963, may include this requirement in
                        the discretion of the Highway Commission.
                        On contracts executed prior to April 26,
                        1963, the contractorsmust comply with the
                        law as It existed at such time and an affl-
                        davit of bills paid muat be furnished the
                        Texas Highway Department prior to receiving
                        final payment.
                                                Very truly yours,
                                                WAGGONER CARR
                                                Attorney General of Texas


                                                BY
                                                  Assistant Attorney General
            REB:pm
            APPROVED:
            OPINION COMMITTEE:
            W. V. Geppert, Chairman
            Grady Chandler
            John Reeves
            Eawati Moffett
            M. K. Wall

            APPROVED FOR THE ATTORNEY GENERAL
            BY: Stanton Stone



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