n.lestate mard of~Control
Austin, Texas

Attention Mr.   Clark Hright

Gentlemen:                             OpinionNo. O-1676
                                       Be: Constructionof Art. 647, B.C.&
                                       1926, relatingto preferencesof looal
                                       bidders.

         ThEIlk
              YOU fOc YOU btter Of %'VelUbr13, 1939; requestingthe opinion
of this deyartamt aetothe proper oonstruotionof Article 647 of the Revised
Civil &Etikbs of T&e, 1925, when appliedto'the situationset forth in your
letter,uhiohreads in prt as follows:

"In oomsotion lath oertainbids a queetiorm  has arisen as tothe proper oonstruo-
tioa ofArtiole 647, Bwised Civil Btatutes,1926. On certaintypes of merohan-
dise pvohased by the Board of Controlfor various institution8of the State,
there are usuallyseveralbidders. Sam of these biddersare corporations       organ-
ised under the laws of Texas tid doing businessin Texas. Epoh of themmI&aine
im stook at their plaos of businessin Texas tist of the mrohandise;‘whiith,
throughtheir Ifids,theyoffer to sell the 2tate. This sumotidise is also
offeredfor sale to the generalpublio. The other biddingon these items are
foreignoorporations~, eaoh of whioh has a permitto do ‘busiwcls in Th.
Sme of them have agents or representatives;  but 80110of tha Mintains ia
Texas a stook of the merohaudisethey offer throughtheir bids to sellthe
state. in some instanoes,both stateand foreignoorporationshave bid
exaotlythe same emomt on the identicalarticle.

8Question: Wder the faots above stated,where the bids are the same on the
ideirtioalartiole,sad ass&ing that other thingsare equal,.mhioh,if any,
of the abovementimed bidders are entitled to preferenoeunder Article 647
or any other statuteapplying?"

         Article 647, supra,reads as follows: 'The terms and oonditions;end
th# periodfor whioh suoh Mds or proposalsare invitedshall be olearlystated
in the advertisement.When ihe 8sme artioleis~estimatedfor by two or more
institutions,Imt of differentbrand8 or grades,such article8shall be purohas-
ad se as to produoeuuiform$.tyin use by eaoh institution,and other things
being equal, suppliesoffered.lybidderswho have On establ%d-ml 100~1 'hlSine88,
shall have preference.8(Wdersooringours).
        Artiole 647 as originallyenaotedAs Seotioa 4 of Senate Bill HOO.172,
Aots 1699, Tmmtty-sixthLegislature,General Laws 1699, page 136, and read in
State Poard of Control- Page 2 (C-1678)



part as follcms: ". . . The periodfor which such bids or pmp88als are
invitedshall be olsarlystatedin said advertisem8nt,  a8 8811 a8 the tern
and 8onditicmsoontaaplated by the provisionsof this ohaptersrhen'the ssme
art1818i.8estimatedfor by '818~or more inStitiiOn8, hrf of differenthrand8
or grades,the pumhasing agentmay determinevh.ioP. of the brand8OT grade6
shall bapurohamd 80 as to produceruPifOrmiti in'118eby all the iXI8titutiOnSr




        The Seotionin question(norArticle 647, RevisedCivil Statutes,1926)
becsrme
      drtiole7328 of the @viead Civil Statutes,1911, andwas not materially
ohanged. However,in 1915,&tic18 7328 was amended (Act8 1916, Chapter126)
80 asto appearlath8 8-e form a8 the presentArtiole 647 of the &,V%SedCivil
btptutes,1926.

         W8 oall your attentionalso to Art1018650 of the T&visedCivil Statutes
of 1925,whioh read8a8 foll8vsr "The,Boardmay advertisefor the various arti-
0188 and suppliesnesded eithar separatelyor all together,and mqy aooept a bid
for ths s-e to In furnishedeither separatelyor all byone bidd8r. Pmfemnoe
Shallbe given,all thiag8 b8%ng eqUI&tO stat.8  pmduots." (&dersoo&%

         It may be aeon that th8 h8gislaturehaa directedits igeatst&t the
policr~r
       to be pursuedin making its oontraotsshouldbe to favor Tm     8ono8ms
and Texas produotsowr out of stat8 pmduots and businessestabli&me&~, other
thing8 being equal. From this interpretation of the legialativuintentin 8n-
Poting the88 statut88,it is OlePrthEt under the fE8tS presentedin your letter,
oorporateUdders organi8edunder the'lawsoftbis Stat8 aad doing laz8lness.in
this State,,shouldbe givun preferenceunder ktiole 647, supm, over foreign
oorporatebiddershavinga permit to do busin      in this State,but not main-
tainingStock8Of I8erOh886dd.88in Texas*

         Perhapsa queati~oamight be raised a8 to.the authorityof the Legisla-
ture to 80 disoriminateagainstforsign corporatebidders. kuwer, u8 be-
liave that&an the State has east off its olbak of sovemignty, and ha6 stepp8d
forwardin its pmprietarg oapaoity,it may oontraota8 8xy individualor pri-
vate corporation. Just qs an individualor privatecorporation  may dea it
good businessto givu preferenoato Texas produosand Teas   busimess88riXblish-
meats, 80 also may the Rater

         Paragraph3951 (3),Volum8 144 Corpus Juris,page 1251, reads in part
as follows: *A oorponrtioais not a 'oiti8en'dthin the meaning of that
olauseof the.FbderalConstitutionrhiohdeolareathat the oitiz&s of each
&at8 shallbe wtitled toall the privilegeaand d8v8unitiks  of oitize~ns
                                                                     in the
saveralstates,or the olausein the Pourteenth&aendmantprovidingthat no
stats shallmake or 8afW8-8oag law nhioh shall abridgethe privilegeor inrmun-
ities of oitiaenaof the United StdeS. Th8y ammere OreatUF38of the local
law, wtitled to moognition la other statesand toths enforoem&i of their
oontraotathsmia only on suohtermr a8 suoh 8tatasmay se8 fit to impose.
State Board of Control- Page 3 (O-1676)



Therefore,these clausesdo not r&featthe mle that a oorporationcreatedby
one state oam &eroise noxe of the f7m~tioaaor pu-ivilegsaoonferredby its
oharterin env other stats of th8 Baion. exoeuttithe oumityawd oonsentof
th8 latter. It followsthat a state may diso-&i&at8 in favir of its uwa
oorporetionsagainstoorporations oharteredby anotherstatstand suoh dis-
oriwiIIptiorp
            18 sot unoonstitutionalas a di8oriminEtiOuEgPinStthe individual
oitisensofth8 other state. As to the nature aud degree of disoriminatioa,
it belongsto the stateto detenuine,subjeotouly to auoh limit&ions on her
soverei&q as may be found in the f'uadsmeatallaw of the Qion. . . -8
(Tkdersooring ours).

         It is well sstabllahedbyth8 dsoi6ionsof the SupremeCourt of the
UnitedStatesand the Texas SupremeCourtthatin enteringinto6 oontraota
state lay8osideits attributesof sovweigwty and binds itself sub8tautially
a8 oae of its om oitisensunder his oontraot,and the lawwhioh m866ures
individualrights and responsibilitiesmeasureswith few exoeptioasthose of
the states.

        Ra-hnanv. Greenbow,102 U.S. 672, 26 Law. Rd. 271)
        Poindexterv. Greenbow,114 U. S. 270, 29 Law Ed. 185;
        Keith V. Clark,97 U. 8. 464, 24 Law Ed. 10711
        Murray v. Chvleston 96 U. 8. 432, 24 Law Ed:760;
        Charle~~Soriherat Sons v. krrs, 114 Tar. 11, 262 6.W. 722:
        Conlsyv. Daught8rsof the Republio,106 'Pew.077, 166 S.W. 197.

        See also 36 Cyo., PpgsS 669, 671s 26 Ruling Case Eaw, Section25,,
page 392.

         Conssqusntly, you are respectfullyadvised,End it is the opinionof
this deparbnent,.thatwhan  equal bids are subzittadto the Bxardof Control
in aooordanos~withthe prwisions of Chapter3 of Title 20 of the Ravissd
Civil Statutes,1926, by a TeX68 corporation and a foreignOorporEtion, and all
                     are eqUd, it is the duty of the Stat8 Board of Control
other ooIcSid8IrationS
and its purohasingagent under Artiole 647 of th8 RsvisedCivil Statutesof
Texas, 1925, to give preferenoeto the TeXrS oorporEtiono

                                            Yours very truly
JSsFGtegu
                                          ATTCREEIGEBSRALOFTEUS
APPROVEDNov. 20, 1939
/s/Gerald C. &nn                          @J /s/Walter R. Kooh'
ATIDRRETGEB2AL OF 'Ex*8                          Walter R. Kooh

Approv8dtOpinionCmimitiee
         BWB-   chainnut
