       OFFICE   OF THE    ATTORNEY    GENERAL   OF TEXAS
                             AUSTIN




Honorable George Ii.Sheppard
Comptroller 0r Pub110 Aooounte
Au&in, Texas
Dear Sir:




                                             e.nd to pay Cor the en-
                                           a ~~remlumru:.o+ t~hecur-




                                      n of The University or
                                      to a contract with a
                                      he purp033 or insuring
                                      us 0r The Unlvsrslty
                                   8, against the loss by
                         od or rive years comcvmclng Feb-
                         nd expiring February 9, 1949, and
                         ntlre prsmlus out or tho currant

                   is tha policy or the Stat2 that all bulld-
                  belonging to The University of Texas shall be
kept insured at all tlmos against loss by fire or tornadoes 1s
expressed in Senate Concurrent Hssolutlon No. 3, possaA’ln the
Second Called Session of the 37th Leglzlature, 1921. Ths first
part of this resolution declares a policy thot tho State sholl
carry its own lnsurrmce upon State buildlrjgeXIL?Oontcnte, end
that nc lmuranccr pollcles ehould be taken cut uy:ccmy of the
public building8 or tho oontentrr, The State Board of Control
 Honorsblo Ceor~!eII.Sheppard - lae,e2



 end g&  other Elonrdshsvls churge of the building6 of the
 State, aiiEiieirtents,     were instructed not to have such
 bulldings nor property Insured, notwithstanding there may
 be items in the appropriation bills authorizing the erpend-
.ltun of money for the paymerrtor lnsuranoe premiums. Uow-
 war, the laet part or the reaolutlon in&es an exCeptiOn of
 FhhrUniversity or Taxas, and said reeolutlon, with reference
ito The University of Taxer,,ruada as followa:

           "Frovlded, however, thet this rasolutlon, or
7:
 x.   any part or it6 provlelons shall not ap1,lyto or arrect
      Ths Univereity of Texas, and its branches, and that
0
..     t 16 a fixed policy of the State thst all buildioga
      and the oontents theraor belonging to The University
      of Texa6, and it6 braPche6, shall be kept insured et
      all time6 agalnet any loss by fire or tornadoe6.n
      (Underscoring ours.)
           Yblle thlo ~6sOlUtiOZldoe6 not hava the emct     or a
 gen6ral law, yet it does hsve the arrect 0r a law upon the
 particular subjact about which ths Resolution is made, 60 long
 66 thet particular thing nor .conAltlon oxist6 or until such
 rosolutlon is otherwise revoked by tbe Legislature. There hss
 been no subsequent declarstlon of polloy by the Legislature, so
 the matter of the Board of Regent6 or The Univerrity of Texas
 taking out lneurance on the bulldlngs and contents of The Unl-
 veralty or Texaa 16 in~obedlrnoe to a leglslatlve Alreotlve.
            seotlon 6, Artlole 8, or the Constitution or Tei.86,
'rprovides,,in part:
           Y?o money 6hall be drawn from the Tresrury but
      in purauanor of rpeolflo appropriationa made by law;
      nor shall any appropriation Or money be madr for a
      longer term than two years, . .. . . ."
            seotlon l,9,.Artlols3, or the Constitution of Texas,
i provider in part:
           "No debt shall be created by or on behalf Or the
      State, except . . . . " (exception not appllcnble to
      this inquiry).
           TWO leading oase6 in which the Supreae Court of
 this State decided questions pertinent to this inquiry are
 the oases or Charles SOribner'6 Sons v. Jdarrs (114 Tex. 11;
Bonorable     George H. Sheppard - Fsge 3


262 S. W. 722) and Fort Worth Cavalry Club 0. Sheppard ( 125
T8x: 339; 83 S. W. (26) 660). In eaoh or these oa6es the
oourt had before it the question of a oontrnot by an agenoy
of the State ror a term or rive years.
 !:
          In the oa6e or Charlea Sorlbner’e Son6 V. Marrs
‘(Supra),the faot eltuatlon we6 that the State Board or Sdu-
eation had entered into a oontraot ior the purchase or oer-
tain booke.ror a par104 or rive year6 in pursuance or a
rtatute authorizing raid Board , 6ubjeot to certain llmltatlons,
to anter into contracts for furnishing textbook6 not to ex-
coed a 61x year parlod. In thie case, the Suprels Court held
that the oontraot was not in violation Of the ooncrtltutlonal
llmltatlon that no aoproprlatlon or money sball be 661da for
a term longer than tuo yearn, beoeusa the oontraot, under
lta terms, was not one which orsated an obligation for payment
beyond the two-year appropriation period, and that the contraot
did not require an appropriation for a term longer than two
yrarr. The oourt rurther.held that an obligation agalnat the
State that run6 currently with the revenue is not a edebte
within the nenesnlag
                   of Seotion 49, Artlolr 3 Of the COii8tltU-
tlon or Texsr.
      I
r’             In this ca68, the court said, in part:
a,              “The obllgstlon of the oontract 16 not to buy
a.!       a fixad number or amount .ot books, but only 60 many
8:.       a6 are needed by the aohools or the Stste. Llablll-
  i       ty is fixed only on ruoh amount6 a6 ‘are requiai-
          tloned by the truetees  of the rohool6 . . . .
“. ;
 ‘-;           *No quantity la stipulated and no prom166 to
i .       pay, only an agreement to use the book6 in the
 .’L
          sohOol6 . . . . The obligation to pay arises only
          upon the purohasa’and Aellvery of book6 for
 . .
          the year nseded, and aooordlng to the pur-
          chaee, The book6 so furnished and 60 purohaaed
          during any year do not mske a charge on the fu-
          ture re6ourcen of the State, but are paid for
          each year as t.he~purohadeclare made.
               *It logloallg rollows that the contract ia
  .       not repugnant to that part of Sea. 6, Art. 8 of the
          Constitution which provider: ,*Norehall any ap-
          propriation of money be made for a longer turm than
          two yesrs. ‘”
tionor6bl6    G6crcra   i..   Lhappsrd - l'npe4



              In the OIWJ of Fort %or'tbCavalry Club v. Snrppnrd
(WIUra),     thr   Supmna     Court   krld   tbat   I!I oontrrrot   rheraby   ths
 Adjutant Generel lttWtpt8d to blob tha state on 16000 or a
 bulldlne for a Xstlonal auard Armory, with peymnts to be mar
 ln lnnual instello6nto over a prrlod or rive yaar6, w6m void.
.Tbe Court held that the contraot    ~8   not euthorlewl by etntuta,
 and tbst undw the rxirtlm stetutso prrtelnlng to tha Adjutant
 06nrrrl'a ihfmrtarat,  tbr AdjuLant    Oowral hod the lmpllsd
 power to tiW:aa oontreot wlthirrtbs linitr or the amount or
 the appropriation and the porlod oS tbr approprlatltn.
           From 6 reading or th6 r0reuoJPR oaras, it appears
that a ooutmot   would be a valid onr It a comrtrnct or it8
‘asturo had bssn authorlead by law, mtl under ltm taaaa
 onstrd     no llabllitp saalnet thr Litetabeyond thr two-yarr
 tam   of the approprltitlon. la applying the6e priao!plrcr
 to the rowr      or the Bard    or Regents   to oontroot  rlth   ref-
 6r63oa to lnsurano6 orI Lhr buildinga of tba Unlrrroity,            we
 rind that the lloblllty for ptayoant doss not rxtsnd beyond
 tha tan6 OS ~318ocrrrnt eppro rlatlon, and ~6 furtbsr Slnd
 an rxprrso la~S.alnt.lvr     dlrrotf00, in no unoertrrlnla%usge,
 that  11:ouranca ahall br osrrlad on all OS the bulldlogs on4
 ocntento OS Tha~errlty           or Texan. In t. c. R. hi. 3,
 37th Log.,    2nd  Callra  Oeeelon   (~upre), tbo i8ulmluturr, 88
 a eanarnl polloy; Olrroted that         Doardo and &ovarniq,    bodler
 charg6d with the raoponolblllty ot ell Btak bulldlnua rball
 not take out lnauranoa on aold bulldings, aml, in that mm
 3srolutlon, innar of th# Unlvrrrity        of Tarn6,  t&a 801s axca tlm
 to that gormm.l     rolloy when it dirtactedtb4t lnsuranca-__fr_, SIP
 be oitr:~lrtl ~3 all building8 lnclooucants 0r tll6Uuloarrity
 OS Tomn.      That  the Board or krcmnte Or Taxbe Unlreralty,
 rotha under lllthorltyor anti in obodlance to tbat express
4iraotiv0,     hsd 0urriolrnt    euthorltp   to provide rcr lrturanoa
 uaaor a reorccnbla ooutraot       ln liar wltb ourtomary      and OS-
 tebllsbad good buolnarr praotloer In inourlng bu:ldlr@s or
 that, nnturr~ oan be rwlensbly        imp1166 Sror tba lereuo~e       :S
 ttlr Reaolut!O*.

           It la a msttrr Or oo.a~onknowlrQ.6 t!mt  n Sire-yaar
Slra lneurnnoa policy la Sar more aoonomioal tLan lneuriw for
a yenr or two yrarm at a tint*. It lo a Matter of CO'P~OUknow-
iedp,6tbct  it io cuato.marypractlor ozi tbr Fart or thoar
bnor-510 G6c:.Te:L rhoppnrd,        I~gr    5



&weed alVi tiw rar~onsibillty for n rirrrblo lnrrmtmat la
lulldinm to tnirocut Ora lncutwwa ror a tara loaeor tn4a
.90yabrcj jr!cot, 0 ri,tay86r pOl%Oy 18 qU%ta VO,7OOR,OUd
.t   is rrcn~nltcd   am a aood   buainasr       prtIoticr.

          The limltatlon  thnt no apt.cvpr:utlbib
                                                cf iwc~y oball
a em611Ccr (I ton i0nf.m thur,b LWO ~~JA-U~WJSInat 1mJy l li.d-
ation  On ths powar. tc wake a ovntraat for u grwt~r Lima, wnarr
ha OOntraOt do68 UOt mJquir4 an approprioticn b6yuA& tha two
mr period I)0 Tsxos Jurlrpr4braoo, p. Us;.      Jl LL rorsi~noo
0 tha insur~44~ CuntrQot on tkr L'at:crdty lmv idldl~.., lt la
leer that  no ?lrbflity io orootod aG.aincrttL6 tltatsbsyond the
10 yrar sprroprjstlon.
          Len the 0666 or Sorlturr*c 3mo                v.   143rr3,   (Wpra),
 ha oourt anld, in pert:




             -T~F r3ct that      tte orrioiol    trtm of orfior  le.
       co-n.nronQ two yeers, t~athsr with tbs         lldWLi44
       thnt approprlatioa      @hll    not  br a3bS for 0 lV@taT
       terx thm twr ysnm,          ln argumi na lnGtOatl4& 6
       6ensrsf publlo     polloy,    ~6 that 11) k,-rrpiUa  wltt
       i;a%ssthis 1intt'dtiGtI     of two yesrs ohoull br k-
       plied on tha tam Of Contmotm.




                  A';bj6ot6,a~prcpr~atioAn Cd OO.itr&CtS,
            '*cot::
       ara bi such lmpOrtslW6, anrl84&i so con300 6na eo
       a8mantjal to tbs eaWiRhItr8tiGa Gs trill
                                              aovbrnannt,
       tllstit is ressonmb~r to pramma thnt ii it l-d been
Honorsbla George H. Sheppard, l~ape6

         the purpoaa of the makers of tbr Cocrtitutloc to
         prohibit the makIng or oontraote that would extend
         011r a pd0a    or DOL’~ thsn   two y1ar0,   they ~0uld
         bar0 mada that   purpora   plain by dl,ract rerarrnor
         to that kportent     8ubjoot.m

                Tha &~Irlataro haa, tima and tlmr agaln, 4pproprl4-
tea rum         ror bumiryr,     ipprot0mmd    an6 8~ppu08    0r ai1 kind8,
whloh h8t8d        98 iQN8tfMnt8     Of tha Ststr for b4yond thr tam     of
'that partiti8r       two-)a8r QQropriation.      Appropriation8    ham
 near   bran 1ImItod to thorr itans wham tha banafitr            armtad
 by thr lpproprl8tion      would bo lxh4u8tad by tha en4 or tha farm
 of the two-ymr       appropriation    period. Tram an an4178ir ot the
 oa8.8 harrln oitrd, it ap aara that the tv!cy44r lbt~tation
 upon tha powr to eontraoP ha8 rrfsmnor to tha tam of tha
 obl a tloo n      r 8a ltr   d tha Stata by 8U4h oonimct,
                          gaIn8t                                   rather
 d%mi           4 prrlod or tlma    for whloh ths benarlts of tba oontraot
 lo a l
      yxtand i.a favor Of thr Stit8.

                              Taxa
                   Tha Stat4 of      hae mde latg4 inrostruntr         ln
UniTar8ity   bUildirrg8.      The Lagislatur4 hr dlrrotrd         that tirr
in8lW4llOa  8ha     b    Mtiiad    On 411 Univarrity   buildlN8.        A
rir4   yrar + r4 Irmuan44 polloy I8 a rsaroMbl4 OILI,and ruoh
a pOl:Oy   18 OOJi8i8kCLt with r400&%46          and 46’tnblishrd    bUllIl488
praotIOa8 with rataNuO4 to Insuriq bUtidfng8              Of that    tyw.
Th4 oontraot iOr iMUr4nO4          do88 IhOt OrOSt4 4 1IabIlIty 4g8in8t
tha Stata which rxt4nd8 bayond tha trrm of thr 8pproprIatIon.
lo tha lb88no4 of 4 rtatutr prohlbitlng ruoh 4 QOntr4ot, it
18 mr 8o M b la        to l88UP4 that        thr bird      Of   Rogantr Or Th4 uni-
r~nlt~       of T4I.48had tha irplI44 4uthorIty to                   antar 4 X'44800-
abla     oontmot      for   tha   h8tuilyl     Of   tha   law buildin&   O? Tar48
Unlrorrlt~.
             It I8 g4fi8IWllJ   ha14 that thr gorarniag body Ot 4
oollaga or lllAit4r8it~may m4k4 8uOh OOIltr4Otl48 4CI Within
tha lSa%tr or tbr authority oonfarrrd upon It by ohartrr Or
8tituta    and ordinarily    ha8 Imp1144 OWIC to do thO84 thing8
n444484ry ana oonrrnirnt to looompl! ah thr objaot of tha In-
8tftUtiOIl   and POt plWhlbit4d    by hr.   (14 Ccrpu8 furl8 Soo-
undue, Seotlon 1s. p* 1351, 1352-l
.




    Honorablr Oaorgr B. Sheppard, Pagr 7


                 It I8 thhrrrforrthr opluloa of thl.8 bpartmant that
    thr Board oi h(4lit8 or ma uJlI~4r8Ic~or %X48 -8 authorlead
    to eater .info 4 ?:~a r84r oontnot    for rim Inruranoa on the
    UW bUildb#      Of Tha fhliV4r8it~Of TlX48, tOg4th4r with it8
    oontratr and to w       all of thr &rrmItu trap the ourrrnt ap-
    proprirtfdn,    providad thrr4 I8 an 4pproprI4tIon  for that pur-
    pO84.

                 TruBtin&   that   the rorrgoW      fully   lIl8WOr8tour   In-
    quiry,   n   4r4


                                                     Tour8 vary   truly

                                                 ATTORNZTONRAL      OF
