Untitled Texas Attorney General Opinion ( 1940 )

Mr. H. D. Dodgen Opinion No. O-2864
Chief Clerk Re : Liability of Game, Fish & Oyster
Game, Fish & Oyster Commlssion to Water Improvement District
Commission for "flat rate water service charge,"
Austin, Texas for customary charge for water used, and
for sinking fund taxes.
Dear Sir:
This will acknowledge receipt of your letter of Octo-
ber 26 1940, wherein you request the opinion of this department
as to 8ertain matters therein set out. We quote your letter as
follows:
"The State of Texas owns 40.57 acres of land lying
within the boundaries of the Bexar-Medina-Atascosa Counties
Water Improvement District No. 1. There has been built on
this land a fish hatchery which is now in operation. The
hatchery is being supplied with water from an irrigation
canal operated by the above water improvement district.
"We respectfully request your opinion on the following
questions:
"1. Should the Game, Fish and Oyster Commission be
required to pay the flat rate water service charge custom-
arily assessed against owners of land lying within this
district?
"2. Is the Game, Fish and Oyster Commission required
to pay the customary charges for water used, such charge
being in addition to the flat rate charge?
"3 . Is the Game, Fish and Oyster Commission required
to pay sinking fund taxes assessed by the Water Improvement
District?
"4. Does the Bexar-Medina-Atascosa Counties Water
Improvement District No. 1 have authority to furnish water
without charge to the State Fish Hatchery located within
that district?
29
Mr. H. D. Dodges, Pago 2
‘3. fs the CIaw, Fish and Oyster Commis-
sion roqulrod to pay sinking fund taxes assessed
by the Water Inprovewnt Di8triOtT
'4. Does the Bexar-&dine-Ataesosa Countlos
Water ImprovemaatDlstriOt Ilo.1 hare authority
to furnish water without sharge to the Stats
Fish Iiatohery looated withln that dfmtrlot?
Tour attention is oaUed to t.b lxlstenoe
of sn agreewnt the orlglnal copy OS whloh is
belieredto be In tb file of the'AttorneyGen-
eral's Offloe, relative to the supply of water
to be furnished the State Fish Batolmry located
within the boundaries of the Bexar-Medina-Atasoosa
Countiss Water Iaprorewnt Dirtriot lo. l.*
We shall dlsouss the agrsement referred to In mother
portion of this opinion.
Under our 86atutes when a water oontrul and improve-
ment dietriot is organlead, it is rspuired to set up two funds.
Ona of those, prorlded for in Article 9115, R. C. 3.. 1925, 18
the wlntcrest alld sinking fund,” and the other ,
denozninated~
authorized b;l Article 7714, 8. C. S., 1925, is the %aintenanoe
and operating rund."
Artiolm 9712, B. c. S., 1925, empowere the direotors
to levy a tax upon all propsrty within tha distriot suffiolent
to pay the lntsrest on its bonds and to provide a slnklng fund
to pay off the bonds at maturity. The dlreotors of tlm Dls-
trlct under Artlols 1113 are required to plaoe in tha first
fund above menttoqed money reallsod iron taxes.'
Moneys ior ths wlntenanoe and operating fund are
derived rrom two typss or oharges ror water servioe. The
direotors OS the Distrlst wider the provisions of Artiole
7152, R..U. ,S.,1925, are require4 to estimate the operating
and Oaintenanoeexpense at tb beginning of eaoh year, A’
portion ot the neoessarg fund is then to be raised by assess-
aents against all lrrlgablr lsnds within the dirrtriot; pro
rata per aore, and the remainder is to k paid by porsonc
taking water.
We assume that what loa refer ta as tlm “flat rate
water oharge* is the pro rata assesswnt levied against -Oh
Mr. H. D. Dodgen, page 3 (O-2864)
the State government in the absence of provisions of theconsti-
tution or statutes specifically granti ng them relief thereform.
The exemption from taxation may not be construed to relieve them
of such other burdens. See 40 Tex.Jur. 109 and authorities
cited.
We doubt that It could be seriously contended that the
customary charge for water used, even remotely approaches any
of the accepted definitions of a **tax." This charge is nothing
more than a fee for a service to be paid only by those making
use of such service.
There might have been some doubt as to whether the as-
sessments or "flat rate water charge" Is a lltax,"had not our
Appellate Courts already foreclosed the question. This assess-
ment is levied against all irrigable lands within the District
without regard to whether the owners of such lands avail them-
selves of the water service or not.
However, the statute authorizing this charge scrupu-
lously refrains from designating this charge as a 14taxwand, as
stated, our Courts, in the few instances when the,question was
before them, have pointed out that this assessment is not a tax."
In Brady vs. Hidalgo County Water Control and Improve-
ment District (Civ.App., San Antonio, 1932) 36 S.W.(2d) 298;
affirmed by the Commission of Appeals in 91 S.W. (2d) 1058, the
court used the following language:
"The district cannot levy taxes except to provide
interest upon its bonds and sinking fund for the retire-
ment of its bonds. Its operating expenses, after construc-
tion expenses, must come from water rentals and service
charpes."
In Western Metal Manufacturing Company of Texas vs.
Cameron County Water Improvement District (Civ.App. Fort Worth,
1927) 105 S.W.(2d) 700, error dismissed, the'court makes the
following observation:
"The prayer in plaintiff's petition asking for a man-
damus to require the assessment and collection of fees,
against land in the district for the purpose of raising
funds to pay the current maintenance and operating expense
of the district was fully justified, if recovery should be
had by it. We have shown that by the provisions of arti-
cle 7752, it is the duty of the directors to estimate the
current expense for the year and to collect it from the
land owners in the district in the manner and proportions
therein set out. .*** It will be noted, however, that the
. -
,-- Mr. H. D. Dodgen, page 4 (O-2664)
prayer in the petition asks for the writ of mandamus to
require the collection of .‘taxes’as well as assessments
against the property in the district to raise revenues
for the purpose of paying plaintiff’s debt. If the writ
is granted it should not require the collection of ‘taxes’
.for the purpose mentioned, since taxes can only be cr
lected to cay interest and to create a sinking fund to re-
tire the bonds when due.”
The following language from.Texas Jurisprudence also
adheres to this distinction:
“While taxation is the source of the funds used for
the payment of interest on the district’s bonded indebted-
ness and the accumulation of a sinking fund, expenses of
maintaining and operating the water system cannot be met in
this way. Such expenses mustbe paid, in the case of water
improvement districts at least, from a fund known as the
‘maintenance and operating fund, I which is created by levy-
ing pro rata assessments against all irrigable lands within
the districtand by making charges for all waters delivered
,‘- to water users.” 44 Tex.Jur. 295.
.(,
/j,
Another opinion by the Commission of Appeals declared:
“The only provision in the chapter expressly authoriz-
ing a tax for any purpose is to be found in Article 5107-
69 (now Art. 7712)” Creager et al v. Hidalgo County Water
Improvement Dist. No. 4. 283 S.W. 157.
It becomes apparent, therefore, that the answers to
your first and second questions are that the Commission is re-
quired to pay both the “flat rate water service charge” assessed
against all irrigable land in the district and the customary
charge for water used-unless the District has by the contract
mentioned above relieved the Commission of the burden of these
charges.
The agreement to which you have directed our attention
recites that the Commission agreed to locate a fish hatchery
within the boundaries of the Bexar-Medina-Atascosa Counties
Water Improvement District No. 1 and that the directors of the
District agreed to furnish the land and water necessary for so
long as the property was used for a hatchery. By a resolution
of the Board of Directors of the District,,which was incorpor-
ated into the agreement, the District agreed to furnish water
to the Commission “without charge.”
:-~
Two possible constructions of the language “without
charge” occur to us--that neither the “flat rate” nor the
. -_
hr. H. D. Dodgen, page 5 (o-2864)
"customary service charge" would be paid or that the Commission
would be relieved only of payment of the "customary service
charge." The District has apparently adopted the latter con-
struction, while the Commission has adopted the former.
We have no way of knowing which construction those who
made the agreement intended or whether the meaning of this
phrase was even discussed. However, at all events, it appears
to be undisputed that the parties intended to relieve the Com-
mission at least of the burden of paying the customary service
charges based upon the amount cf,water used. In the absence of
more ,evidencewe feel constrained'to.ado~pt.thatconstruction.
Under such a construction, the answer to your first
question is Iryes",while the answer to your second question is
and you are so advised. The obvious answer to your third
rlnolV,
question, under the pertinent authorities cited above is "no."
Your fourth question concerns the authority of the
directors of the D1stric.tto donate water service to theCommis-
sion. We find nothing in the statutes which msy be construed
as authorizing the directors to dispose of water service other-
wise than by.sale. Sound public policy would mi.litateagainst
a presumption of such authority. See Jones v. Wi.lliams,121
Tex. 94, 45 S.W. (2d) 130 79 A.L.R. 983; Llano County v.
Knowles, et al, (Civ.App.$ 29 S.W. 549; and Dreeben vs. White-
hurst (Comm.App., 1934.)68 S.W. (2d) 1025.
We have?reached tbc:conclusion however tha,tyour ob-
ject in asking the fourth o,?l?st~ion
was to determine whether
the District may furnish weter t,othe Commission witbout charge
under the agreement to which you directed our attention ,inyour
letter, and we will answer i ::under that assumption. Tht1t
agreement, as pointed out above, recites as a consideration the
promise on the part of the Commission to locate a fish hatchery
within the boundaries of the District. 'WCknow of no reason
why this would not be valid consideration upon which the Dis-
trict would be authorized to furnish the water service.
The bi~ndingeffect 01 i~r,i:<
coni,rac
t might be upheld
on still another basis. It war.bold in a recent case that even
though a contract enter4 into ky7 dir~c.tcr::of a Water Improve-
ment District is prohibited by the Cons,titutlonand laws of the
,State, yet if it was deliberately entered into by the proper
District officials, thereunto lawfully auti,cl;~iz?d
and the other
party was induced thereby to perform service:;exacted of it in
rel~ianceupon the contraci:and the District accepted such serv-
ices and benefits derivable therefrom, the District was bound
by the terms of the contract. Nagle, Witt, Rollins Engineering
Co. vs. La Salle Water Improvement District NC. 1 (Civ,App.,
ur. Ii. D. Dodgen, Page 8
latter aonstruotion, while the Commission has adopted the
f ora4r.
tie have no way of knowing which eonstruotlon
those who trade the agreemnt intended or whether the msn-
ing of this phrase was even discussed. However, at all
4vent 8 ) it appears to be undieputed that the parties intend-
ed to relieve the Comiission at least of the burden of pipp
lng the customary service charges based upon the amount of
water used. In the absence of more evidenoe we tee1 eon-
strained to adopt that oonstruotlon.
Under such a construction, the answer to your
rirat question is eyes?, while the answer to your seoond Ques-
tion is “non, and you are so advised. The obvious answer to
your third question, under the pertinent authorities oited
above is “no. n
Your fourth question eonoerns the authority of the
direotoro of the Distriot to donate water service to the Corn-
mission. be find nothing in the statutes which may be oon-
strued as authorizing the dlreotors to dispose of water serv-
ice otherwise thsn by sale. Sound publlo polioy would mill-
tats against a presumption of suoh authority. See Jones t.
Williams, 131 Ter. 94, 45 S. W. (9d) 130, 79 A. L. R. 983;
Llano County v. Rnowles, et al, (Civ. App.) S9 9. W. 349;
gi&Dreeben vs. Whitehurst (Comm. App., 1934) 68 5. W. (Rd)
.
We have reaahed the oonoluslon however that your
object In asking the fourth question was to determine wheth-
er the Distriot may furnish water to the Commission without
aharge under the agreement to which you dlreoted our atten-
tion in your letter, ahd we will anewer it under that araruql)-
tlon. That agreement, aa pointed out above, recites as a
consideration the promlse on tho part of the Conm.lsalon to
locate a fish hatohery within the boumlaries of tlm Distrlot.
We know of no reason why this would not be valid oonaldera-
tion upon whioh the Dlstriot would be authorized to furnish
the water eervioe.
The bindlhg effeot of this oontraot might be Up-
held on still another basis. It was held in a reoent aaoo
that even though a contract entered Into by dimotors of a
Water Improvement District is prohibited by the Constitution
and laws of the State, yet if it was deliberately entered
.
Mr. H. D. Dodgon, Pa&8 7
into by the proper Distriot oiiloials, themunto lawfully
authorized end the othar psrty was lnducpd thereby to par-
fo r msenlo ss lxaotsd of it In relianoe upon tb oontraot
and the Dirtriot aooeptod such ssnioss and benstlts ds-
Arable thereiron,the District was bound by the terms ot
the oontraot. Waglo, Witt, Bolllns EngInesrIng Co. vs.
La Salle Water Impror~msnt Dlstriot No. 1 (Clr. App., San
Antonio, 1931) 44 8. W. (Ed) 1033, error dismissed. Sss
also Oltl 0i Tyasr f. Jester, 97 l's% 344, 78 8. W. 103S;
Sludsr w. Gitr of San Antonio (Corn.App.) 3 8. W. (Zd)
S4lj cab Eudspsth County Consenatlon & Reolanmtlon Dist.
T. Spars (Clr. Am., El Paso, 1931) 39 8. W. (2d) 94.
You are advissd, therefore, that under th8 agree-
ment referred to, the Dlstriot is authorizedto furnish
water to tbr State Fish Eatohsry looated within that Dis-
trlot wwithout oharga.*
Trusting that we hate sufrloientlyanswered your
LnptirJ, ws are
Yours wry trn&y
- -
Peter Manisoaloo
Assistant
APiRCfVEDNOV27, 1940
i
s
ATTORNEY GENERAL OF TEXAS