Untitled Texas Attorney General Opinion ( 1986 )

,
The Attorney General of Texas
JIM MATTOX August 14, 1986
Attorney General
Supreme Court Building Honorable W. N. Kirby Opinion No: .JM-531
P. 0. Box 12548
Austin, TX. 78711. 2548 commissioner
512/475.2501 Texas Education Agency Re: Current validity of a lease
Telex 9101874.1367 201 East 11th Street entered into by a school district
Telecopier 51214750266 Austin, Texas 78701 in 1950
714 Jackson, Suite 700
Dear Mr. Kirby:
Dallas. TX. 752024508
21417428944 You request advice on the validity of a lease agreement entered
into in 1950 by the Board of Trustees of the Fredericksburg
Independent School District [hereinafter the "Board"]. The lease is
4824 Alberta Ave., Suite 1W
El Paso, TX. 79905.2793
between the Board and a lessee. It provides that the Board lease a
91515353484 designated tract of the school district's property for a monthly
amount of $60.00 for 50 years in exchange for the lessee's agreement
to expend at least !;30,000on an office building to be erected on the
property. It is a:Lsorelevant to your inquiry that the lease agree-
ment contained an unconditional right on the part of the lessee to
assign the agreemer,tto a third party.
SO6 Broadway, Suite 312 In 1973, mom than 20 years later, the lessee assigned his
Lubbock, TX. 79401.3479 interest in the lease agreement, with the Board's approval, to the
SW747-5238
president of the Board. That individual, the "assignee," remained a
school trustee unt:.lapproximately 8 months after the assignment when
4369 N. Tenth, Suite B he resigned.
McAllen, TX. 78501~1685
5121682.4547
You also inform us that at the time of the assignment in 1973,
the Board was reiting office space in the building. The Board
200 Main Plaza, Suite 400 continued to rent space after the assignment from the assignee until
San Antonio, TX. 78205.2797 the rent was raiseilto an unaffordable amount. Moreover, you indicate
51212254191 that the school district, through the Board, in all likelihood will
never locate an iwtructional facility on the property. The lease, 30
years from the date it was entered into, is hindering the school
An Equal Opportunity/
Affirmative Actlon Employer district from obta:.ningthe best and highest use from its property.
In that regarcl,you have asked the following questions:
1. Whether the prior [Board] had the authority
to lease the school property under such terms as
are cont;Linedin the lease?
p. 2447
Honorable W. N. Kirby - Page!2 (JM-531)
2. Whether the [Board] is estopped from
attacking the lease in light of the fact that the
district has accepted rentals for 35 years without
attempting to set the lease aside?
3. Whether the assignment of the lease in 1973
to a then-current member of the [Board] affects
the validity of the lease?
4. Whether the school district has any right
to the rentals rweived by the lessee and assignee
if the lease is ii fact illegal?
These questions you htve presented contain issues of fact which
must be decided before a complete resolution of the problem may be
addressed. This office dc#es not resolve factual questions in the
opinion process. See. e.g.,,Attorney General Opinion JM-486 (1986);
JM-394 (1985). However, be will address those matters regarding
strictly legal issues in order to provide some guidance in this
matter.
It is well settled law in this state that the board of trustees
of an indeuendent school district has exclusive power to manage and
control school property. :Irusteesof Independent-School District of ?
Cleburne v. Johnson County"i)emocraticExecutive Committee, 52 S.W.Zd
71, 72 (Tex. 1932); see ali& Attorney General Opinion M-1047 (1972).
The Board's discretion is limited to the extent that it will not use
this power to impinge upon the district's governmental purpose, that
is, operating a public school. River Road Neighborhood Association v.
South Texas Sport, No. 04-ll4-00206-CV(Tex. App. - San Antonio 1986,
rehearing granted) (not :!et reported); Royse Independent School
District v. Reinhardt, 159 S.W. 1010 (Tex. Civ. App. - Dallas 1913,
writ ref'd); Attorney General Opinion M-1047 (1972). This reasoning
is consistent with the rule that the governmental powers or functions
of a government or governmental agency can never be abdicated or
See Clear Lake City Water Authority v. Clear Lake
bargained away. ---
Utilities District, 549 S.b'.Zd 385 (Tex. 1977); see also Banker v.
Jefferson County Water Control and Improvement District, 277 S.W.Zd
130. 134 (Tex. Civ. App. - Ezaumont 1955, writ ref'd n.r.e.).
The question of whether a particular action of a school board
impinges upon the district's governmental purpose, that is, operating
a public school, is essentially a question of fact. See River Road
Neighborhood Association v. South Texas Sports, No. 04-84-00206-CV
(Tex. App. - San Antonio 71986, no writ) (not yet reported); Royse
Independent School Distric,: v. Reinhardt, 159 S.W. 1010 (Tex. Civ.
APP. - Dallas 1913, writ repd).
p. 2448
Honorable W. N. Kirby - Page 3 (JM-531)
It is argued by the present Board that the lease is presently
impinging upon the Board's authority to perform its governmental
function because the Board is unable to take substantial steps to
increase the revenue being generated from the property. We have not
found any authority supporting the proposition that a governmental
body is entitled to renege on a valid contract simply because it is
financially advisable to d', so. Cf. City of Big Spring v. Board of
Control, 404 S.W.Zd 810 (Tex. 1966). As indicated above, these
factual questions are beyond the scope of this office's authority.
The Board also cites South Texas Sports, m, in support of its
.position that the 50-year%ase agreement should be declared invalid.
In that case a school board entered into a le'aseagreement which had a
potential maximum duratior. of 50 years. The lease was between a
professional football club and a school district for certain property
owned by the school distr1c.tconsisting of an athletic stadium. The
stadium had been primarily used as a place for athletic contests
involving schools of the d:Lstrict. The football club, lessee, leased
the stadium to play its hone games. Id. The Court of Civil Appeals
held that the lease was invalid becauzit effectively destroyed the
power of the district to manage and control the school property for
school purposes.
The court declared the lease involved in South Texas Sports
invalid because the record revealed that although the lease provided
that the club may use the stadium except when the school district
needed the facility, scheduling conflicts were in fact resolved in
favor of the lessee. The school district's use of the facility was at
the discretion of the lessee. Unlike the facts presented to us, the
record supplied to the court was sufficient to determine whether the
50-year lease impinged upon the school district's governmental
function. Moreover, the cc,urtdid not conclude that because the lease
agreement would bind the school district for a period of 50 years it
was void as contrary to public policy.
In response to your third question, it seems clear that the 1973
assignment to the then-current member of the Board did not affect the
validity of the lease. T!la assignment merely created a contractual
relationship between the :Board and its president. It was this
contractual relationship w~:Lch Is void and is against public policy.
Accordingly, the relation:rhip between the original lessee and the
Board was unaffected by the:assignment.
The lease agreement g;ivethe lessee the "unconditional" right to
assign his interest in the l.ease. Therefore, the Board's approval was
not necessary to complete the transaction between the lessee and the
then-current member of thr, Board. The assignment was made prior to
the enactment of article 9313bof V.T.C.S. Therefore, the validity of
the assignment turns on whether it falls within the common law
p. 2449
Honorable W. N. Kirby - Page!4 (JM-531)
prohibition which bars sct.001 districts from contracting with any
entity in which a trustee has a pecuniary interest, no matter how
small. See Meyers v. Walke,;:, 276 S.W. 305 (Tex. Civ. App. - Eastland
1925, nowrit); City of EdJ.r,burg v. Ellis, 59 S.W.Zd 99 (Tex. Comm'n
APP. 1933); Delta Electric I:onstruction Co. v. City of San Antonio,
437 S.W.2d 602 (Tex. Civ. Al,p.- San Antonio 1969, writ ref'd n.r.e.);
Attorney General Opinions JM-424 (1986); JM-379 (1985). Such a
contract is "violative of the spirit and letter of our law, and is
against policy." See Meyers v. Walker, supra, at 307. Contracts in
violation of the Meyers v. Urrlker
-- doctrine are void. Id.
Although the assignment between the lessee and the assignee did
not involve a direct contract.with the Board, the contractual
arrangement falls squarely l&thin the Meyers prohib.ition. An assignee
stands in the same position as his assignor. See Houchins v. Scheltz,
590 S.W.Zd 745 (Tex. Civ. Ap:?.- Houston [14th-St.1 1979, no writ).
The Board uresident was entitled to receive rent which is a oecuniarv
benefit. see generally Deli:aElectric Construction Co. v. Ci;y of Sa;
Antonio, 437 S.W.Zd 602 (Te::,Civ. App. - San Antonio 1969. writ ref'd
n.r.e.). Therefore the ass:Lenmentbetween the lessee and the assignee
was illegal and void and had no affect on the validity of the original
lease.
You also ask whether ,the resignation of the Board president,
eight months after the 197: assignment, had the effect of curing the
void transaction. The MEfers v. Walker court also stands for the
proposition that an ultra v.Lres and void contract with governmental
entity is not subject to ra,?ification. See Meyers v. Walker, 276 S.W.
306, at 307. Therefore, the subsequent resignation could not cure the
illegal or void contract.
Finally, questions two (2) and four (4) are so intertwined with
issues of fact that we cannot provide definitive answers. These
questions involve equitable considerations which requfre the balancing
of factual and legal prine:iples beyond the scope of this office's
authority.
SUMMARY
A board of trustees of an independent school
district has the authority to lease school pro-
perty so long as 1:helease does not impinge upon
the board's authority to perform its essential
function; i.e., to operate public schools. The
question of whether the 50-year lease agreement,
which is hindez,ing Fredericksburg Independent
School District from obtaining a higher rental
value for its prop=rty. impinges upon its
essential governmental function and is a question
p. 2450
Honorable W. N. Kirby - Page:5 {JM-531)
of fact. The sin3:Lefact that the lease is for a
period of 50 year; is not necessarily contrary to
public policy.
Although the 1373 assignment between the Board
president and the Lessee did not involve a direct
contractual rela,::ionshipwith the Board, the
effects of the armignment created a relationship
which resulted in a pecuniary benefit to the Board
president, and therefore, was void as against
public policy. The question of whether a party to
a contract may benefit from the equitable doctrine
of estoppel invo:.ves a determination of factual
issues.
JIM MATTOX
Attorney General of Texas
JACK RIGHTOWER
First Assistant Attorney General
MARY KELLER
Executive Assistant Attorne:rGeneral
RICK GILPIN
Chairman, Opinion Committee
Prepared by Tony Guillory
Assistant Attorney General
p. 2451