              E           ORNEY              GENE-I.
                         OF         XAS

                     AZ~STIN     11. Texas


                              January 23, 1961


Mr. Wm. J. Burke                 Opinion NO. w-983
Executive Director
State Board of Control           Re:    Whether the Comptroller
Austin, Texas                           is authorized to pay from
                                        an appropriation for the
                                        construction of a building
                                        at Goree Prison Farm an
                                        invoice for cancellation
                                        fee occasioned by the Board
                                        of Control cancelling a
Dear Mr. Burke:                         contract for light fixtures.
     Your opinion request is in the following language:
          "On April 6, 1959 bids were opened based on
     a requisition from the Department of Corrections
     number PS-2230-H covering a quantity of light
     fixtures for use in the prison system.
          "As a result of the bid and a determination
     of the lowest and best bid, Purchase Order number
     22484 was issued to Wholesale Electric Supply
     Company, 42LI2Gulf Freeway, Houston, Texas. The
     total of the Purchase Order was $2,027.24.
          "Following issue of the Purchase Order in the
     regular manner, which included a copy of the Pur-
     chase Order to the Department of Corrections, the
     requisitioning agency discovered that funds allo-
     cated for t'hepurchase of such fixtures were
     inadequate and the value of the Purchase Order
     exceeded the amount of available funds. Therefore,
     it requested that the Purchase Order be cancelled.
     The vendor was contacted and he agreed to the can-
     cellation of the order under the circumstances,
     provided that his manufacturer, or source of supply,
     had not already begun fabrication of said fixtures.
     When the Wholesale Electric Suppljicontacted its
     supplier, it found that the fixtures were already
     in process of fabrication and that in order to
     cancel the order it would be necessary to defray
     the cost of/or reimburse the manufacturer for
     work already ,completed in the amount of $455.76.
Hr .   Wm. J. Burke, page 2 (I:!\:-983)


             "According to correspondence in our file in
        connection v?S.th
                        the order, the Board of Department
        of Corrections approved the payment of $455.76 can-
        cellation fees, or charge, at their meeting on
        July 13, 1959.
            "There is now some question as to whether or
       not, in view of the above circumstances, the Comp-
       troller is authorized to pay such cancellation
       billing, since actually no merchandise was received,
       but that the charge of $455.76 actually represents
       a service charge for the cancellation of merchandise
       ordered exceeding available appropriations.
            "The invoice for the cancellation fee of
       $455.76 has been submitted to us for payment and/or
       processing; therefore, our question is:
                 'Can such a charge be legally paid
                 from monies appropriated to the Depart-
                 ment of Corrections under such above
                 described circumstances?'
            "Your formal opinion at the earliest possible
       date will be appreciated."
     Considerable more light is thrown on this situation
by letter from Mr. 0. 73.Ellis, Director of the Texas Depart-
ment of Corrections, the applicable portions of which we quote:
          II
           . . . Our Mr. A. G. McKain, Assistant Director
     in charge of construction and maintenance, came to me
     with a statement that he had checked the price of the
     light fixtures specified by the architect for the
     chapel at Goree with the Wholesale Electric Supply
     Company in Houston and had received an estimated cost
     of 9230 each. I told Mr. McKain that we could not
     afford to spend $230 each for light fixtures and to
     contact the architect and ask for specifications on
     a cheaper fixture. The architect told Mr. McKain
     that the light fixtures in question could be purchased
     from a Dallas firm for $82.50 each plus 10 percent.
     I told him to go ahead with the requisition. The
     requisition was processed here and sent to the State
     Board of Control in Austin giving the Dallas firm as
     a reference (Southern Electric Company). For some
     reason, the Dallas firm did not bid. E'ther they were
     not mailed the bid request, or else it was misplaced
     by them. The bids were received and the order was let
     to the Wholesale Electric Supply Company of Houston at
     $222 each.
Mr. Wm. J. Burke, page 3 (WW33)


         "Mr. McKain called this to my attention and I
    told him it wouldn't do. We then called the Whole-
    sale Electric Supply Company about cancelling the
    order. They told Mr. McKain that these were
    special manufactured fixtures, that work had
    already been started on the order, and that there
    would be a charge of 30 percent of the manufactured
    cost ($455.76) cancellation charge. We passed all
    this information on to the Board of Control. As a
    result the original order amounting to $1,776 was
    cancelled and an order placed with the Southern
    Electric Company of Dallas for a total of $726."
      In H.B. 133 the 55th Legislature, Regular Session,
appropriated $~;;LOOO.OO in a lump sum for buildings on
eight prison         including three buildings at Goree
Prison Unit. Undes the terms of the bill the Governor
divided this between the several farms, awarding $200,000.00
for the buildings at Goree. This was broken down by Prison
Board and an allocation of $1,133.80 for light fixtures was
made.
     Mr. Burke, in his opinion request, aptly raises the
question we must answer when he says: "There is some question
as to whether . . . the Comptroller is authorized to pay such
cancellation billing since actually no merchandise was re-
ceived," and he concludes with the question: "Can such a
charge be legally paid from monies appropriated to the Depart-
ment of Corrections under such above described circumstances?"
     Whether Wholesale Electric Co. has a cause of action
against the State for breach of contract we are not here
called upon to say. If they do, they have their remedy.
However, a diligent search fails to reveal any statutory
authorization for either the Board of Control or the Board
of the Department of Corrections to bind the State by settling
a claim for damages, nor is there any authority for either to
make a contract binding the State to pay a cancellation fee.
     The State is not bound by contracts made in its behalf
by its officers or agents without previous authcrity conferred
by law. 38 Tex.Jur., page 636, citing State v. Perlstein, 79
S.W.2d 143; Nichols v. State, 32 S.W. 452; and State v.
Ragland, 138 Tex. 393, 159 S.W.2d 105.
     On your inquiry as to whether this cancellation charge
may be legally paid from monies appropriated for construc-
tion of the buildings at Goree Prison Farm, it is obvious
that no damage claims were anticipated or in the contemplation
Mr. Wm. J. Burke, page 4 (W-983)


of the Legislature when this appropriation was made. It Js,
therefore, our opinion and we so hold that your question
should be answered in the negative,

                        SUMMARY
            The Comptroller may not legally pay the
            invoice for cancellation fee based upon
            the cancellation by the Board of Control
            of an order for electric light fixtures
            in building at Goree Prison Farm, from the
            appropriation in H.B. 133 of the 55th
            Legislature.
                               Yours very truly,
                               WILL WILSON




WRS:vj
APPROVED:
OPINION COMMITTEE
W. V. Geppert, Chairman
Houghton Brownlee
Tom I. McFarllng
B. H. Tlmmins, Jr.
John Webster

REVIEWED FOR THE ATTORNEY GENERAL
BY: Leonard Passmore
