Untitled Texas Attorney General Opinion ( 1961 )

E ORNEY GENE-I.
OF XAS
AZ~STIN 11. Texas
January 23, 1961
Mr. Wm. J. Burke Opinion NO. w-983
Executive Director
State Board of Control Re: Whether the Comptroller
Austin, Texas is authorized to pay from
an appropriation for the
construction of a building
at Goree Prison Farm an
invoice for cancellation
fee occasioned by the Board
of Control cancelling a
Dear Mr. Burke: contract for light fixtures.
Your opinion request is in the following language:
"On April 6, 1959 bids were opened based on
a requisition from the Department of Corrections
number PS-2230-H covering a quantity of light
fixtures for use in the prison system.
"As a result of the bid and a determination
of the lowest and best bid, Purchase Order number
22484 was issued to Wholesale Electric Supply
Company, 42LI2Gulf Freeway, Houston, Texas. The
total of the Purchase Order was $2,027.24.
"Following issue of the Purchase Order in the
regular manner, which included a copy of the Pur-
chase Order to the Department of Corrections, the
requisitioning agency discovered that funds allo-
cated for t'hepurchase of such fixtures were
inadequate and the value of the Purchase Order
exceeded the amount of available funds. Therefore,
it requested that the Purchase Order be cancelled.
The vendor was contacted and he agreed to the can-
cellation of the order under the circumstances,
provided that his manufacturer, or source of supply,
had not already begun fabrication of said fixtures.
When the Wholesale Electric Suppljicontacted its
supplier, it found that the fixtures were already
in process of fabrication and that in order to
cancel the order it would be necessary to defray
the cost of/or reimburse the manufacturer for
work already ,completed in the amount of $455.76.
Hr . Wm. J. Burke, page 2 (I:!\:-983)
"According to correspondence in our file in
connection v?S.th
the order, the Board of Department
of Corrections approved the payment of $455.76 can-
cellation fees, or charge, at their meeting on
July 13, 1959.
"There is now some question as to whether or
not, in view of the above circumstances, the Comp-
troller is authorized to pay such cancellation
billing, since actually no merchandise was received,
but that the charge of $455.76 actually represents
a service charge for the cancellation of merchandise
ordered exceeding available appropriations.
"The invoice for the cancellation fee of
$455.76 has been submitted to us for payment and/or
processing; therefore, our question is:
'Can such a charge be legally paid
from monies appropriated to the Depart-
ment of Corrections under such above
described circumstances?'
"Your formal opinion at the earliest possible
date will be appreciated."
Considerable more light is thrown on this situation
by letter from Mr. 0. 73.Ellis, Director of the Texas Depart-
ment of Corrections, the applicable portions of which we quote:
II
. . . Our Mr. A. G. McKain, Assistant Director
in charge of construction and maintenance, came to me
with a statement that he had checked the price of the
light fixtures specified by the architect for the
chapel at Goree with the Wholesale Electric Supply
Company in Houston and had received an estimated cost
of 9230 each. I told Mr. McKain that we could not
afford to spend $230 each for light fixtures and to
contact the architect and ask for specifications on
a cheaper fixture. The architect told Mr. McKain
that the light fixtures in question could be purchased
from a Dallas firm for $82.50 each plus 10 percent.
I told him to go ahead with the requisition. The
requisition was processed here and sent to the State
Board of Control in Austin giving the Dallas firm as
a reference (Southern Electric Company). For some
reason, the Dallas firm did not bid. E'ther they were
not mailed the bid request, or else it was misplaced
by them. The bids were received and the order was let
to the Wholesale Electric Supply Company of Houston at
$222 each.
Mr. Wm. J. Burke, page 3 (WW33)
"Mr. McKain called this to my attention and I
told him it wouldn't do. We then called the Whole-
sale Electric Supply Company about cancelling the
order. They told Mr. McKain that these were
special manufactured fixtures, that work had
already been started on the order, and that there
would be a charge of 30 percent of the manufactured
cost ($455.76) cancellation charge. We passed all
this information on to the Board of Control. As a
result the original order amounting to $1,776 was
cancelled and an order placed with the Southern
Electric Company of Dallas for a total of $726."
In H.B. 133 the 55th Legislature, Regular Session,
appropriated $~;;LOOO.OO in a lump sum for buildings on
eight prison including three buildings at Goree
Prison Unit. Undes the terms of the bill the Governor
divided this between the several farms, awarding $200,000.00
for the buildings at Goree. This was broken down by Prison
Board and an allocation of $1,133.80 for light fixtures was
made.
Mr. Burke, in his opinion request, aptly raises the
question we must answer when he says: "There is some question
as to whether . . . the Comptroller is authorized to pay such
cancellation billing since actually no merchandise was re-
ceived," and he concludes with the question: "Can such a
charge be legally paid from monies appropriated to the Depart-
ment of Corrections under such above described circumstances?"
Whether Wholesale Electric Co. has a cause of action
against the State for breach of contract we are not here
called upon to say. If they do, they have their remedy.
However, a diligent search fails to reveal any statutory
authorization for either the Board of Control or the Board
of the Department of Corrections to bind the State by settling
a claim for damages, nor is there any authority for either to
make a contract binding the State to pay a cancellation fee.
The State is not bound by contracts made in its behalf
by its officers or agents without previous authcrity conferred
by law. 38 Tex.Jur., page 636, citing State v. Perlstein, 79
S.W.2d 143; Nichols v. State, 32 S.W. 452; and State v.
Ragland, 138 Tex. 393, 159 S.W.2d 105.
On your inquiry as to whether this cancellation charge
may be legally paid from monies appropriated for construc-
tion of the buildings at Goree Prison Farm, it is obvious
that no damage claims were anticipated or in the contemplation
Mr. Wm. J. Burke, page 4 (W-983)
of the Legislature when this appropriation was made. It Js,
therefore, our opinion and we so hold that your question
should be answered in the negative,
SUMMARY
The Comptroller may not legally pay the
invoice for cancellation fee based upon
the cancellation by the Board of Control
of an order for electric light fixtures
in building at Goree Prison Farm, from the
appropriation in H.B. 133 of the 55th
Legislature.
Yours very truly,
WILL WILSON
WRS:vj
APPROVED:
OPINION COMMITTEE
W. V. Geppert, Chairman
Houghton Brownlee
Tom I. McFarllng
B. H. Tlmmins, Jr.
John Webster
REVIEWED FOR THE ATTORNEY GENERAL
BY: Leonard Passmore