c




                             E                         GENEIRAL
                                      OF       EXAS
                                     AUSTIN   1% TEXAS
      WI&      WILSON
    AT-X-ORNEYGENERAL
                                           January 18, 1961


        Honorable H. D. Dodgen                   Opinion No. ~~-984
        Executive Secretary
        Game and Fish Commission                 Re:   Whether a permittee under a Game
        Austin, Texas                                  and Fish Commission permit author-
                                                       izing removal of shell from Galves-
                                                       ton Bay is liable to the State for
                                                       an increase in the price to be paid
                                                       for shell ordered by the Commission
         Dear Mr. Do&en:                               prior to the expiration of the permit.

                Your letter reads:

                      "Effective April 25, 1954,this office renewed a shell permit
                for W. D. Haden Company of Houston to remove shell from Galveston
                Bay for cormnercialpurposes. The permit as originally written pro-
                vided, among other things, that the permittee shall file monthly
                reports and remit to the Game and Fish Commission 7# per cubic yard
                for all shell removed from the public waters during the month for
                which the report is made. An endorsement to the permit effective
                January 1, 1955,was attached to the permit on December 6, 1954. The
                permit was issued for one year and expired on April 25, 1955.

                      "On October 1, 1954,the Game and Fish Commission adopted a
                resolution increasing the price to be paid by all shell dredgers
                from 7# to lO#.per cubic yard effective January 1, 1955,and approved
                by the Governor on November 4, 1954. All shell dredgers were properly
                advised on December 6, 1954,of the increase in price and all paid it
                without question except W. D. Haden Company which continued to remit
                to the',Gameand Fish Complissionon the basis of 76 per cubic yard.
                When the Game and Fish Commission requested payment for the shell at
                the rate of lO$!per cubic yard and W. D. Haden Company refused to pay
                it, a suit was filed by W. D. Haden Company in the District Court of
                Galveston County when cancellation of the permit was threatened. By
                agreement between attxneys, W. D. Haden Company consented to pay Into
                the registry of the court the sum of 31 per cubic yard for all shell
                produced from January 1, 1955,until the expiration of the permit on
                April25, 1955. The total sum deposited by W. D. Raden Company in
                the registry of the court was $21,053.87.

                      "In this trial of the case, judgment was rendered In favor of
                the plaintiff by the trial court and was appealed by the state to the
                Court of Civil Appeals for the 2nd Supreme Judicial District of Texas
Honorable H. D. Dodgen, Page 2   (~~-984)
     where the judgment of the trial court was reversed and the
     case remanded to the court below with a directive that the
     suit be dismissed. c303S.W.2d4431 An appeal to the Supreme
     Court of Texas was taken by the plaintiff where the court up-
     held the judgment of the Court of Civil Appeals, reversing
     the judgment of the trial court, and ordered the suit dismissed.
     The Supreme Court's final judgment ordered the money returned to
     W. D. Haden Company. [308S.W.2d8381

           "It appears that the paramount question before the court
     was whether W. D. Haden Company had legislative authority to sue
     the state.and judgment was rendered on that issue. The question
     of whether W. D. Haden Company owes the additional sum of 3&!per
     cubic yard forshell produced from the public waters from January
     1, 1955,to April 25, 1955,was not determined by the court.

           "Your opinion is respectfully requested as to whether the
     sum of $21,053.87 is due the state by W. D. Haden Company, repre-
     senting the increase in price of shell from January 1, 1955,to
     April 25, 1955, and removed under authority of the above mentioned
     permit."

     The permit invqlved reads as follows: '

                         "GAME & FISH COMMISSION.OF TEXAS
                                    Austin, Texas

                          SAND,SHEiLAIiDGRAVELPERMPI

                                  No. 243-A-6

      "STATE OF TEXAS
      County of Travis    1   TO WHOM THIS MAY CONCERN:

      "PERMISSION is hereby granted W. D. Haden Company of Houston, Texas,
      to remove mudshell placed under the management and control of the
      Game and Fish Commission, as provided in Art. 4051, R.C.S., 1925, as
      follows:

           "From an area three (3) miles north and'south and five
           (5) miles east and west, adjacent to the Galveston Bay
           Oil Field:

      "SUBJECT TO THE FOLLOWING PROVISIONS:

      "First. That the permittee herein shall make sworn report not later
      than the 10th day of each month on all materials removed from the
Honorable H. D. Dodgen, Page 3    (~-98’+)

     public waters during the preceding month at the location
     described above, and shall maintain permanent records of
     all such materials produced so that such records may be
     inspected by a representative of the Game and Fish Commission
     at any time. A report each month is requested whether any
     materials are produced or not.

      "Second. That the permittees shall remit to the Game and Fish
      Commission 7#.per cubic yard on all sand and shell and 8# per
      cubic yard on all gravel removed as above provided during the
      month for which each report is made.

      "Third. That the permittee shall not interfere with any State
      or Federal inprovements, navigation, fish life, riparian rights
      or landowners in or along any stream or violate any law or regu-
      lation of the Game and Fish Commission pertaining to the taking
      of sand, shell and/or gravel. If any shell is to be produced
      under this permit, it is especially agreed and understood that
      the permittee shall not operate within 1500 feet of a live oyster
      reef.

      "Fourth. Nor shall permittee dredge any shell not covered with
      at least two feet of soil silt or mud. Nothing herein shall be
      construed to allow dredging in such place or manner so as to
      damage the property of any riparian owner.

      "Fifth. That the bond of $5,000.00 now on file inthe office of
      the Game and Fish Commission with American General Insurance Company
      as surety and the permittee herein as principal, conditioned upon
      the faithful compliance of said permittee with the terms and condi-
      tions of this permit, shall be used to recover any sum or sums of
      money to the extent of $5,000.00 that may be due the State by virtue
      of this permit.

     "Sixth. That should the permittee herein violate any condition of
     this permit or violate any law or regulation pertaining to the taking
     of sand, shell and/or gravel, the Game and Fish Commission may cancel
     this permit; otherwise,-it shall expire on the 25th day of April, A.D.,
     1955.

                    "THIS PERMIT IS NOT EXCLUSIVE - NOT TRANSFERABLE.

     "Given under my hand and seal of office at Austin, Texas, this the 15th
     day of April, A.D., 1954.

                                             GAME AND FISH COMMISSION


                                             BY:   H. D. Dodgen
                                                   Executive Secretary"
Honorable A. D. Do&en, Page 4     bw?8'+)

       Article 4051, Vernon's Annotated Texas Civil Statutes reads in part as
follows:

            "All 1 . . bays within the tidewater limits . . . together
      with the marl and sand of commercial value, and all the shells,
      mudshell or gravel of whatsoever kind that may be a . . In or
      upon the bottoms of any . . 0 bay . a . are hereby placed under
      the management, control and protection of the Commissioner. None
      of the marl, gravel, shells, mudshells or sand'included.herein
      shall be purchased, taken away or disturbed, except as provided
      herein, . . . ."

      Article 4052, V.A.T.C.S., reads in part as follows:

            "The Commissioner is hereby invested with all the power
      and authority necessary to carry into effect the provisions of
      this chapter, and shall have full charge and discretion over all
      matters pertaining to the sale, the taking, carrying away or
      disturbing of all marl, sand, or gravel of commercial value, and
      all gravel and shells or mudshell . . . and their protection from
      free use and unlawful disturbing or appropriation of same, with
      such exceptions as may be provided herein."

      Article 4053, V.A.T.C.S., reads in part as follows:

            "Anyone desiring to purchase any of the marl and sand of
      commercial value and any of the gravel, shells or mudshell 0 . .
      or otherwise operate in any of the waters or upon any I . . bay
      . . . shall first make written application therefor to the Commis-
      sioner designating the limits of the territory in which such person
      desires to operate. If the Commissioner is satisfied that the
      taking, carrying away or disturbing of the marl, gravel, sand,
      shells or mudshell in the designated territory would not damage or
      injuriously affect any oysters, oyster beds, fish inhabiting waters
      thereof~. . . and that such operation would not damage or injuriously
      affect any island, reef, bar, channel, . . . used for . 0 . naviga-
      tion . . . he may issue such permit to such person after such appli-
      cant shall have complied with all requirements prescribed by said
      Commissioner. The permit shall authorize the applicant to take,
      carry away or otherwise operate within the limits of such territory
      as may be designated therein, and for such substance or purpose only
      as may be named in the permit and upon the terms and conditions of
      the permit. No permit shall be assignable, and a failure or refusal
      of the holder to comply with the terms and conditions of such uermit
      shall operate as an immediate termination and revocation of all rights
      conferred therein or claimed thereunder. No special privilege or exclu-
      sive right shall be granted to any person, association of persons. cor-
      porate or otherwise, to take or carry away any of such products from
Honorable H. D. Dodgen, Page 5   W-   984)

       any territory or to otherwise operate in or upon any Island, reef,
      ‘bay, lake, river, creek, or bayou included in this chapter."
       [mphasis added]

       Article 4053d, V.A.T.C.S., reads in part as follows:

             "The Game, Fish and Oyster Commissioner . . . may sell the
       marl, gravel, sand, shell or mudshell . . . upon such terms and
       conditions as he may deem proper, but for not less than four ($4)
       cents per ton, and payment therefor shall be made to said Commis-
       sioner. . . .II

       In 1929 the 41st Legislature abolished the office of Game, Fish and Oyster
Commission, and created the Game, Fish and~.0ys~br.Commis;sian,
                                                              and conferred the
powers,fo,rmerly~vestedin the single Commissioner upon such six-memberCommission,
which act became~Article g78f of Vernon's Annotated Penal Code of,Texas.: ,I~'


       In 1951the 52nd Legislature abolished the six-member Game, Fish and Oyster
Commission, and created the nine-member Game and Fish Commission, and conferred
the powers formerly vested in the six-member Commission upon the new nine-member
Commission, which act became Article 978f-3of Vernon's Annotated Penal Code of
Texas.

       A license affecting real property amounts to a mere privilege and imports
no estate or interest'in the property. 27 Tex.Jur, page 856. The statutes plainly
refer to the authorization to remove the shell as a "permit", and the form of such
authorization complies with the statute in this regard. The courts in Texas fre-
quently refer to the agreement under which the permit is granted as a contract,
subject to the special rules governing licenses.

       As a rule a license is revocable at the will of the grantor, 27 Tex.Jur.
page 860. A license which is of a revocable nature may be modified by the licenser
giving timely notice thereof. 53 C.J.'S.page 813. Formerly the rule allowing
revocation was applied virtually without qualification, but the courts of Texas
now recognize four situations in which they will refuse to sanction a revocation
of a license by the licenser: (1) where a parole easement, which otherwise
would amount to no more than a bare license, has been taken out of the statute
of frauds by part performance; (2) where some consideration has been given to
keep the license alive; (3) where the license is directly connected with the
grant of an interest in land, the enjoyment of which depends upon the continued
existence of t,helicense; and (4) where the licensee has been induced to expand
a considerable amount of money or labor in reliance on the subsistence of his
license. 27 Tex.Jur. pages 860-861.

       A state has a right to contract the same as a corporation or individual,
so long as authority is granted by the Legislature. 38 Tex.Jur. pages 635-636.
Honorable H. D. Dodgen, Page 6   (~-984)

It is not for judicial consideration whether a contract regular on its face,
is beneficial to the state or whether it should have been made. 38 Tex.Jur.
cage 637.

       The question presented is whether the Permit granted by the Came and
Fish Commission may be modified by the licenser, the Came and Fish Commission,
by raising the price of shell an additional 3# per yard, contrary to the
original terms of the Permit, prior to its expiration date of April 25, 1955.
And this in turn depends upon whether or not the permit or license is revocable.
As we have seen, ordinarily a license may be revoked at the will of the licenser,
unless it falls within one of the exceptions listed above.

       In the case of Hall v. Willmering 209 S.W. 226 (Tex.Civ.App. 1919 writ of
error refused), Hall and Willmering had dntered into a contract. wherebv Hall
granted to Willmering the exclusive right to enter on Hall's land, and io remove
therefrom gravel and sand for a period of three years, Willmering to pay Hall
1Of per yard for sand and gravel taken, to be paid every thirty days. The con-
tract also provided that if Hall should fall to give notice of termination of the
contract thirty days before expiration of the three years, then at Wlllmering's
option the contract would exist for another three years. After the contract was
executed, Willmering entered upon the premises, and stripped off the surface soil
in order to be able to take the sand and gravel. When the three-year period
expired, Hall failed to give notice, and Willmering continued to take gravel and
sand and tendered his monthly payments for the sand taken. Hall brought suit to
enjoin Willmering from further hauling sand and gravel from the pit. The trial
court gave judgment for the defendant, and plaintiff Hall appealed.

       The Court of Civil Appeals in the Hall case, 209 S.W. 226, said at page
227:

             "The contract contained no absolute agreement on the part of
       Willmering to do anything; the agreement to pay for the gravel which
       he might take and to perform the labor necessary to its taking coming
       into operation only as he might see fit from time to time to exercise
       the privilege of taking gravel, and being an incident thereto. It is
       clear, therefore, that prior to the time that he stripped the ground
       preparatory to exercising the privilege the contract was unilateral,
       and might have been terminated by either party, . . . But the contract
       under consideration is more in the nature of a lease or license to mine
       or to do similar acts on the premises of the grantor, which may result Y
       in mutual benefit to both the grantor and the grantee of the right, and
       there are authorities in this branch of the law which we think are more
       directly in point, and which will control the decision in this case. A
       mere license under earlier decisions might be revoked at the will of tEe
       grantor, so that the licensee was analogous to that of Will.mering in
       this case in that'it was subject to termination at the will of the grantor
       of the right or privilege. In many jurisdictions, however, courts of
Honorable H. D. Dodgen, Page 7   (w-984)
       eauity
       exercise of this right of revocation, where on the faith of its
       grant the grantee thereof had made expenditures on the land for
       the purpose'of exercising the privilege. . . . The tendency of the
       decisions'of this'state'is'evidently to follow this general princi-
       ple of protecting the'licensee under such circumstances. . . ."

       The Court in the Hall case went on to quote with approval the Supreme Court
of Pennsylvania in Rerick v* Kern, 14 Serg. & R. 271, in which the latter court
said:

             "A license may become an agreement on valuable consideration;
       as, where the enjoyment of it must necessarily be preceded by the
       expenditure of money; and when the grantee has made improvements or
       invested capital in consequence of it, he has become a purchaser for
       a valuable consideration. Such grant is direct encouragement to expend
       money, and it would be against all conscience to annul it as soon as
       the benefit expected from the expenditure is beginning to be perceived."

       We have no facts submitted to us which would show what expenditures of money,
if any, the licensee, W. D. Haden Company, has made upon the consideration tbat it
had this permit or any annual renewal thereof. But it is inconceivable that an
operation of this type could be undertaken without a substantial expenditure of
money for barges, dredging equipment, ownership or rental of docks, trucks, etc.
It is true that the original permit was only for one year, and each renewalthere-
after was for a like period time, and that the licensee undertook this operation
fully understanding that the Commission might raise the prices at the time of each
renewal, or refuse to renew the permit at all. But at least the licensee was able
to measure each expenditure of its money against a definite term and a set price
for the duration of that term, in making its business calculations. In all good
conscience, it would not be equitable and fair for the State of Texas to raise the
price of shell, making it applicable to a licensee prior to the end of the term of
the permit granted. See also Risien v. Brown, 73 Tex.'135, 10 S.W. 661 (1889);
Markley et al v. Christen et al, 226 S.W. 150 (Tex.Civ.App., 192C, dism.)

       We hold, therefore, that the permit granted to W. D. Haden Company in April
  1954, to expire on April 25, 1955,became irrevocable by the Came and Fish Commis-
k-ionwhen the licensee entered upon the operation of dredging for shell, expending
its money in so doing. When the license or permit became irrevocable, it was not
subject to modification of its provisions during the period of time for which it
was granted, such as a raise in prices, to the detriment of the licensee. The
permit obviously can be revoked for cause, a number of such causes being enumerated
in the permit itself, but this is a different matter altogether.
Honorable H. D. Dodgen, Page 8    W-984)

                                     SUMMARY

             Where a licensee obtained apermit from the Game and Fish
       Commission to take sand, gravel and shell from the bottom of a
       bay, which permit had a definite expiration date and a fixed price
       per cubic yard for all sand, gravel, or shell taken, and thereafter
       the licensee entered upon the operation of dredging and taking such
       materials and expending its money in such operation, such permit
       became irrevocable for the duration of its term, except for cause.

             Where a license to take sand, gravel and shell becomes irre-
       vocable, excpet for cause, the Game and Fish Commission cannot raise
       the price of sand, gravel and shell, and make such increase in price
       applicable to such licensee contrary to the terms of the permit when
       granted, until after expir,ationof the current permit.

                                               Yours very truly,

                                               WILL WILSON
                                               Attorney General of Texas



                                               By; )4LG1    ++-
                                                  RILEYEUGENEFLEl'CREB
                                                  Assistant

APPROVED:

OPINION COMMITTEE
W. V. Geppert

W. Ray Scruggs
Linward Shivers
Joe M&asters
Leon Pesek

REVIEWEDFORTHEA!Fl'ORNEYGENEiUL
BY: Leonard Passmore
