               THE     AITCBRNEB                GENE&&
                           OF-XAS
                         AURTIN.    T*rxlas     78711




                                   August   3, 1973


The Honorable Dr. J. W. Edgar                    Opinion No.   H-   79
Commissioner   of Education
Texas Education Agency                           Re:     May the State Textbook
201 E. Eleventh Street                                   Committee    recommend   and
Austin, Texas 78701                                      the State Board of Education
                                                         adopt textbooks containing
                                                         materials  cooperatively
                                                         developed by an independent
                                                         laboratory  but financed in
                                                         part by the State, on which I
Dear   Dr.   Edgar:                                      the State will realize royalties7

    Information   submitted in connection with your opinion request reflects
that a contract was executed between the Texas Education Agency and South-
west Education Development     Laboratory,   a non-profit  organization, for
the development~of   certain educational programs.      Funds were made avail-
able under 20 U. S. C. A. 241e, which authorizes    grants to State educational
agencies for educational programs     and projects  reaching migratory   children.
All funds utilized were originally   Federal grant funds, though a portion was
channeled through the State Treasury.

     The research was satisfactorily          conducted and the materials     were devel-
oped to the satisfaction      of the Texas Education Agency,        the State thereby
receiving the principal things it had bargained for.           The contract also.con-
templated,    but did not require,      that the materials   developed would be sub-
sequently published and marketed commercially.               Under Federal Copyright
Guidelines,     U. S. 0. E. ,  35 F. R.   7317,  royalties on materials    published in   *’
connection with a project financed by such Federal grants are to be distributed
to the co-sponsors       in proportion to the co-sponsors’      financial contribution
to the: project.    A co-sponsor     can reject the royalty payments.        The pub-
lisher under the Guidelines may obtain a copyright on the published material
for a five year period.       During that time, the publisher’ alone can utilize
the materials.




                                     p.   357
                                                                              .     .




   The Honorable          Dr.   J. W.   Edgar,        page 2 (H-79)




        The laboratory   which developed the materials     under the TEA contract
   solicited  bids from over 100 publishers     for the publication of these text-
   book materials;    however,  only one bid was received,     and it came from a
   wholly-owned,    non-profit  subsidiary of the laboratory,     The bid contained
   a proposal that any royalties paid be divided on a pro-rata       basis among the
   entities involved in the transaction,   including the.‘Texas   Education Agency,
   The laboratory    contracted with the bidder to publish the mater ial.

         The Texas Education Agency did not join in the contract with the pub-
  : lisher,  nor has it yet either agreed or refused to participate      in royalties
    which might be,realieed    from the sale of the published materials       in this
: 1 or other state:s.   Since the publisher is the only one under the copyright
  ” that may utiliie the materials    developed,   unless the publisher is allowed
    to compete for a textbook contract,     the State of Texas will have no opport-
    unity.to utilize the materials  it was instrumental    in developing.

           Your questions       are:

                  ‘“(1) Legally,., may the State Textbook ,Committee
      ,.      recommend      for adoption and the State Board of Edu-
              cation, of this state adopt ,(for multiple textbook list
              purposes)    textbooks submitted on bid by a publisher,
              which contain materials      cooperstively.developed   with
              an indepe~ndent laboratory,     financed in part,from
              Central Education Agency funds and the State (agency)
              to realize pro-rata    royalties on,all sales thereof.
                          ‘I
                  “(2)     Would foregoing royalties,    provided per-
              missible,      alter the answer ,to question (l)? ‘I’
                           -.
        Your questions can beg answered only in the context of “public policy.      ‘I
   There is no statute which speaks specifically  to ,the problem, but several
   sections of the Texas,Education   Code bear on it.,

        Subchapter B, Chapter 12, Title 2, Texas Education Code, V. T. C. S.,
   $12.11(e) places a duty on the State Textbook Committee        to recommend    to
   the Commissioner     of Education a: complete.list  of: textbooks which it approves
   for .adoption.  Textbook contracts   are to be competitively’bid,except     those
   concerning textbooks for the blind and visually handicapped and for kinder-
   garten purposes,   which may be let without bidding (5 $12.03 and 12.04).
   Section 12.20 requires   contractor  affidavits negating improper interests on
   the part of Textbook Committee      members    or Board members.

                                                 p.    358
The Honorable    J. WI Edgar,     Page 3     (H-79)




    The actions and contracts  of the State Board of Education,  a State agency,
should not only be in harmony with the laws and Constitution of the State of
Texas,  but should also-be consistent with the “public policy” of the State;

     Contracts that interfere with or deetroy the freedom of discretion           that
is required of public officers   in the discharge   of their,official,duties    are
impediments    to the proper adminietration    of government.        Contracts in
their nature calculated to influenc,e the, action of.,public officers      and the effect
of which is to influence them one way or another,       are against public policy.
Meyers v. Walker,’ 276 S. W.. 305 (Tex. Civ. App.,       East.,     1925, no writ);
13 Tex. Jur. 2d,   Contra&s,   § 183.

    Meyers v, Walkeri      supra, involved anticipated bids for city paving
contracts.    Severai of the bidders,  prior to the contract award, agreed
among themselves     and with the Mayor and City Commissioners       that the
successful   bidder would bear the cost of several trips todistant    cities made
by the officials to inspect different types of paving.   Such ,trips were   made
and then successful  bidder paid the expense.    A taxpayer brought suit to
enjoin the sale of the paving bonds on grounds that the re.sulting contract
was illegal,    The Court held the contract void, saying (at p. 307):

            “This trip of inspection was made, no doubt, with
        sincerest   purpose and no intention of wrong, but the
        precedent is dangerous . . . . The greatest danger in
        approving such practice is that one favor would lead
        to another,   and loans, presents  and like innocent gifts
        might lead to a rivalry in offers which would destroy.
        competition in such matters and finally bring a season
        of corruption.. ”

     We are of the’opinion    that this case, too, could establish a dangerous
precedent      Ihe object of our textbook laws is to secure for the children of
Texas the finest materials      that can be obtained at reasonable   cost to the app-
 ropriate school fund..     Decisions  in that area ought not to be influenced by
considerations    of possible loss of profit to the State generally,    or to some
other fund because of the selection made.         Were it otherwise,   prospectiv.e
‘bidders might concentrate      upon supplying such “fringe benefits” rather than
.upon producing the best and most economical        textbooks possible.




                                      p.   359
The Honorable    Dr.   J. W.   Edgar,    page 4    (H-79)




     In our opinion, in order that it might retain freedom to select the best
materials   for the use of Texas school children,       the Texas Board of Education
must decline to participate with private interests        in the continuing royalties
possibly to be realized from the sale of the materials         developed.   There is
really no other choice,    because if it retained an interest in such royalties,
then it could not legitimately     permit the publisher to bid for a: c~ontract.    If
it did not permit the publisher to bid, it would (possibly)       prevent the selection
of the best materials    available.    Thus, any contractual provision purportedly
to allow the Texas Education Agency to participate          with private interests
in the royalties  realized from publication of the materials        would be void.
See Waterbury v. City of Laredo,         5 S. W; 81 (Tex. 1887).

    What we have said ~&es not restrict     the ability of the.State Board of
Education to utilize text materials  prepared,    developed and published by
State agencies which do not occupy the pdsition of ~private contractors.
Nor would lump-sum      settlement of accounts with private contractor8
prior to soliciting bids necessarily   be prohibited.   Public policy does not
discourage   economy or thrift, or the prudent use of available resources,
but it does condemn arrangements      which tend to subvert the meritorious
selection of textbooks.

     To your questions,    then, we reply that in our opinion the State Textbook
Committee     may not recommend      for adoption, nor may the State Board of, ‘I,~~
Education adopt, textbooks upon which the State is to realize pro-rata
royalties   from the private publishers     thereof,  but when the State is not
participating   with private interests   in the royalties  from a textbook, the
textbook may be properly recommended           and adopted though it contains
materials    cooperatively   developed with an independent laboratory,     financed
in part from Central Educational Agency funds.

    In addition to the authorities   cited above, see Grayson County v. Harrell,
202 S. W. 160 (Tex. Civ.App.,      Ama.,   1918, writ ref’d. ); Uvalde Construction
Co. v. Shannon, 165 S. W. 2d 512 (Tex. Civ.App.,         East.,   1942, no writ);
Bryan v. Texas State Board of Education,         163 S. W. 2d 837 (Tex. Civ. App.,
El Paso, 1942, no writ); 13 Texi Jur. 2d, Contracts,        $190; 17 Am. Jur. 2d,
Contracts,   174 et seq. ; Goodier v. Hamilton,      19 P. 2d~ 392 (Wash.  1933);
Dodson v. McCurnin.      160 N.~W. 927 (Iowa 1917).




                                        p.   360
The Honorable   Dr.   J. W.    Edgar,    page 5      (H-79)




                              SUMMARY

            The State Textbook Committee       may not recommend
       for adoption, nor may the State Board of Education adopt,
       textbooks upon which the State is to realize pro-rata
       royalties from the private publishers      thereof, but when
       the State is not participating   with private interests  in the
       royalties  from a textbook,    the textbook may be properly
       recommended     and adopted though it contains materials
       cooperatively  developed with an independent laboratory,
       financed in part from Central Educational Agency funds.

                                             Very   truly yours,




DAVID M. KENDALL,        Chairman
Opinion Committee




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