JOEN BEN s-- AUR'IW~X;~

*-- o- '-December12, 1955

Hon. J. Earl:Rudder /. Cha$rman,Veterans' Land Board Austin, Texas OpinionNO. s-183

Re: Questionsrelating to exe- .theinterest

.~
BearSir:' Outlon sale of of a purchaser Veterans' Land under the.

Program.

Your opinion request consists of sixteen questions contiernlng levy of execution and foreclosure sale, before landafter forfe~lture of the contract of sale and ~purchase;.pursuant to.~ judgments for ~delinquent taxesand private debt, and the effect on a veteran's contractual interest In land 'heIs purchasing.through theVeterans'-LandProgram.

Your questionsmay be resolved into two basic ones, the answers towhich will determine~the
answers~to.yourspcific questions. Summar~ized; the basic questions are:

1.. Is a veteran's interest in the land he Is-purchasing through the Veterans'Land Program subject to foreclosureand sale pursuant to judgment for delinquent taxes thereonand for private debts incurred by him? ..,.'

2. May the purchaser at the foreclosure
or execution sale be~substituted for the veteran in the contract of sale and purchasewith the Veterans' Land Board? i. The answer~toquestionnumber one is in the affirmative:,

if either of the following sets.of facts exist and, In the case of private debt, the land isHon. J. Earl Rudder- page 2 (NO.%183)

nbt otherwise exempt from forced sale:

1. The veteran has had possession of the land for threeyears or more and forfeiture of the contractof sale and purchase has not occurred.

2. The veteranhas had possession of the land under.threeyears and has died or become incapacitatedby reason of illness, and forfeitureof the cotitract of sale and purchase has not occurred.

The answer to questionnumber two affirmative if the facts exist as set forth _- _a is in the

in either of the precedingparagraphsnumbered 1 and 2 and~the veteran and ,purchaser have compliedwith the terms and conditions of the Veterans'Land A&t,.and;‘!as:+gahdsthe tax sale, the two-year‘redemptionperiod 'hasexpired and the veteran has failed to redeem.

The Veterans' Land Act, hereinafter referred to as the Act, is codified as Arti’de 542lm,Vernonis Civil Statutes. The Act was amendedby Chapter 520, Acts of the 54th Legislature, 1955, effective on September 6, 1955, and discussionhereinwill be in the light of theAct as amended. The~Veterans'Land Board will be referred to as the Board.

All lands purchasedby the Board and all lands previously sold by the Board and repossessed for any cause on account of the acts of the purchasers or any other lawful reasons oonstltutea part of theVeterans' Land Fund. (Sets. 8 and 11.) Thus, suCh lands
are exempt from taxation-solong as they remain a part of the Fund. (Art. 7150,V.C.S.) However, when a portion of the lands is sold to a veteranunder a contract of sale and purchase (Sec.l7), it ceases to be a part of the Fund. Although the legal title to the land so contracted to be sold Is In the State, ltls to be considered for all the purposes of taxation, as the property of the person so holding the same. (Art.7173,V.C.S.)

A veteran, upon execution of a contract of sale and purchasewith the Board and entry into poss-: ession, becomes Investedwith the equitable title from the date of the contract,or in any event, from the date he 'takes

possesSiOn. Ingramv. Central Bltulithic. . *-,,y

Hon. J. Earl Rudder - page 3 (No.S-183)

@., 51 S.W.2d 1067 (Tex.Clv.App.1932 error ref.), Leeson v. City of~~Houston, 243 S.W. 485 [Tex.Comm.App.;lm), Walcott v. Kershner, 291 S.W. 195 (Tex;Comm.App;l927). The equitable title Is the taxable title in this instance. ,TexasTurnDike Company v. Dallas County, 271 S.W.2d 400 (Tex.Sup.1954).

But why distinguish the number of years the veteranhas held.possession of the land and how does the~veteran'sdeath or Incapacitybecause of illness affeot then

answer? By referring to Section 17'of the Act it will be seenthat "theBoard .isempowered,in each individual case.to specify the termsof the contract entered intowith the purchaser,not contrary to the provisions of this Act, but no property sold under the provlslons~of this Actshall be transferred, sold or conveyed, in'whole or in part, until the purchaser has enjoyed possession for a period of three (3) years from the date of purchase of said property and compliedwith all the terms and conditions of this Act and the rules and regulations of the Board; provided, however, that should the veteran purchaserdie or become incapacitated by reason of Illness, the propertymay be conveyed before the expiration of said three (3) years by said purchaser or his heirs, administratorsor executors;

. . .n

A veteran in possession for threeyears or more, or in possess'ion under threeyears and incapacitatedbecause of illness,has a vendible interest in the land. A vendible interest vests in his heirs, devisees,
or personal representativesupon his death. (Sec. 20.) Since the Interest is taxable, as well as vendible, the tax lien can be foreclosedand the interest sold-at a tax sale. A tax suit Is brought as an ordinary foreclosure for debt, and sale of the Interest is had as under ordinary execution. (Art. 7326,v.c.s.)

The purchase by a veteran under the Act Is analogous to a purchaseby an individual of county school lands or of public lands owned by the State and sold under a contract of sale and purchasewith forfeitureprovisions.' In Taber v. State, 85 S.W. 835 (Tex.Clv.App. 1905, error ref.), the court said:

"That our tax laws shouldbe construed
as they long have been, to require the vendeeHon. J. Earl Rudder - page 4 (No.S-183)

holding lands under an executory contract of sale to pay the taxes assessed against such lands,we entertainno doubt. Lands
so held are subject to execution as the property of the vendee,

. . .~afterthe school lands are soldby the county'they become the property of the vendee for purposes of taxation,as well as of execution,
even though the sale be on a credit, and the contractexecutory

. . .True, the county is not entirely divested of title to the lands until they are finallypaid for, but until a forfeiture or rescission takesplaces on account of the default of the purchaser the purchaser Is to be regarded as the owner,and the landsmay be sold for taxes as his property."
In.Martinv. Bryson, 71 S.W. 615 (Tex.Clv.App. 1902, error ref.), the court quoted Freeman on Executions
as follows:

"So one who purchases lands'from a state under a contractwhich pro,vides for certain payments,upon themaking of which he will become entitled~ to a patent, and upon default in any of which he forfeits all rights under his contract,has a vendible interest in such lands prior to their forfeiture, and onewhich is subject to execution. The estate acquiredunder the levy of an execution is, of course,no better or more certain estate than-\that held by thenjudgmentdebtor, and rema1n.s liable to be defeatedby the same contingency towhich Itwas subjectbefore the execution sale."

In all cases inwhich lands have been sold,
or may be sold, for default In the payment of taxes, the sheriff selling the same or any of his successors in office, shall make a deed or deeds to the purchaser or to any otherperson towhom the purchaser may d,irectthe deed to be made. (Art. 7330,V.C.S.) However, the purchaser takes the interest subject to the veteran% right, or the right df anyone claiming under him, to the two-yearredemptionperiod from the filing for record of thepurchaser'sdeed, during which perlod the veteran is entitled to possession. (Art. 7345b,V.C.S.)r-- ~~ 5,“Y

Ron. J. Earl Rudders- page 5 (Wo.S-183)

If the veteran~l~s

interest is purchased at the tax sale by any tajring~'un$t, it may be held or soldby the unityfor the use and benefit of Itself and all other taxing unitswhich are parties to the suit and whioh,.have

been.adjudged to 'havetax liens against the lntarest., (Art. 73#5bi~)But such interest is held or sold subject to the,veteran'sright of redemption.

,... :What is the interest of the veteran.tobe acquiredby the purchaser ata tax or ordinary execution sale? It'ls the veteran'.srlghtunder his contract of sale'andpurchase, to possess the land and have a deed executed:to him when theentire indebtednessdue the State $6.

paid;.~as-well

as to conveyhis interest upon certain terms and conditions. (Sec.17.) It is comparable to a'mortgagor'sright of redemption.

InBuchanan v.'Monroe, 22 Tex. 537 (1858), in the equity of redemption, the court said: speaking of
"

. *

. equity ficial .and,itThe doctrine of equity is

of redemption is the real estate, tantamount to the .ls.accordlngly

held to be that the

andbenefee at law; descendible .by,'tiherltance,

devisableby will,and alienableby'deed, precisely as if itwere an absolute estate of Inheritance at law;

. .': 'Themortgagor has a right to lease, sell, and ,inevery respect to deal with themortgaged -.premises

as owner, so long as he is permitted to remainin possession, and so long as it Is understood and held, that every person taking under~hlm,.

takes subject to all the righta of the ,mortgagee,unimpaired and unaffected!:

. . . The equityof redemption

. . . is liable to sale
on execution.

. . .It

'InHouston vi Shear, 210 S.W. 976 (Tex.Civ.ADD. lglg;ePfor-dism.I;-.~b~follow%igwas said concerningexecution .and-'the

mortgagor's rlght'of redemption:
"Where,~as.here,lands subject to contract liens are sold on execution against the owner,,thepurchaser at execution sale succeeds to his rights, and equity confersupon him the privilege of rede~mp,tion,

but only on condition that the rights acquired at execution sale are valid.r.,, .I. Hon. J. Earl Rudder - page 6 (NO-S-183)

In Rosenthalv. Desberger, 1)C S.W. 192 (Tex.Civ. App. 1910), the court said:

1,

. . . All that Is seized and subjected to aale by the levy of the execution is such fight or tltle.as the defendant therein had at the timej and all that passes at the sale Is such right or title as the latter had or owned at the date of the levy, or Fad acquiredbetween that time and the date of the sale. : : At exebutlon sales the purchaser
can claimno greater rights than such as he might acquirehad the defendanthimself conveyed all his right, title and interest in the propertylevied upon."

You have advlsed.thata resolutionwas passed by the Board on January 6, i953,which reads In part as follows:

All transfersby Assignment of Contradt'oh Sale and Purchase shall be approved by the Chairman of the Veterans' Land Board. Such approval shall be accomplished by his signatureand by affixing the Veterans' Land Board seal thereto.

. . ,'

A veteranmay convey all his right, title and interest in the land he Is under contract to purchase,upon certaln~terms and conditionsprovided .intheBet and in conformitywith the rules and regulations of'the Board. Hence, there appears to be no reasonwhy a purchaser at a tax or execution salemay,not. be substituted for the veteran in the contractand~bepermitted to continue it
or liquidate the Indebtedness,provided the Board is satisfied that the facts existas assumed herein.

A veteran in possession for less than three years from the date of his purchase contract and not incapacitatedby reason of illness is prohibited from transferrin property. 7' selling or conveyinghis interest in the

Sec.17.) In this cir&mstance he has no vendible interest in the property subject to sale under execution or like Precess.

1044‘(1894 Moser v. Tucker, 87 Tex.94, 26 S.W. (Tex.Civ.App.1908). ,Bourn v. Robinson, 107 S.W. 87'8 Therefore,a tax judgment against the veteranmust be satisfiedotherwise than by subjecting..,;_~ Hon. J. Earl Rudder "'page ?'(No. s-183)

his interest to a tax sale.~ 'Danciner v. State, 140 Tex. 252, 166 S,w.2d ,914 (1942):

Forfeiture of the veteran's contract restores' the land to the'veterans tLand Fund (Sec.lg), leavingno interest of.the veteran therein subject to taxation or execution. ,Danclger'v.State> s,upr&I .Statev. Stovall, 76 S.w.2d~206~~fTex.Civ.App.l934j error ref.),. The forfeiture would not extlngulsh'thepersonal liability of the veteran and upon reinstatementof thecontract an execution could be levied upon~the veteran's interest in the eventthat his interest,,is subject to a forced sale. Further, upon relnstatement 'ofthe contract the veteran would take the property.subjeotto all tax liens which existed-at the ~timethe forfeiture occur~red, and his interest could‘thereafterbe subjected' to foreclosureand satisfaction'of the.'tax liens. Danciger v. State, supra. Forfeited land sold',to ~anotherveteranwould not be burdened with taxes accrued against the original veteran purchaser. Att'y,Cen. Op. No. o-5062. (i943).

Based upon the above discusuion, asasummary we will answer each of your questionsby numbering them
as listed by.you.

SUMMARY

1. If a veteran's contracthas not been .forfeited'and~adelinquent tax suit is brought and execution levied on the veteran's interest, the Veteran's interestmay be sold at a foreclosure sale only In the.event that (a) the veteran has had possession of the land for three years or more, or (b)' the veteranhas become incapacitatedby reason of illness, or (c) the 'veteran

has died.

2. If a veteran's contracthas not been forfeited and the veteran's contractual if-lterest-is sold..under'an exei?ution(see answer to.questlonNo. l), the purchaser at the foreclosure sale may.be placed in possession of the land and assume the payment of the contract with theVeterans' Land Board in place of the veteran,provided that the two-year ~, period of redemptionhas expired and the veteranHon. J. Earl Rudder - page 8 (No.S-183)

has not exercisedhis right to redeem; Buring the two-yearredemption period and prior to redemption,the purchaserwould be entitled to make the required payments to the Board under the contract in order-to prevent a forfeitureof the contract,but if the veteran later exercised his right of redemptionthe purchaser'srights as a DLUohaserwould be cut off.

3. If a veteran's contract has not been forfeitedand the veteran's contractual interest is sold by levy of execution (see
answer to questionNo. 1) and there are no purchasers, the State or county may purchase said ,interest

and hold ,itIn trust'for the taxing agencies involved. However, the right of theVeterans'Land Board to forfeit the contract for nonpayment of prlncipal or interestwould continue.

4. If a veteran's contract has been forfeitedwhen a'dellnquenttax suit is' brought, only a personal judgment against the veteran couldbe obtained, as the veteran has no interest that can be foreclosed.

5. Our answer to the above question No. 4 fully answersyour question No. 5.

6. If the veteran's contract has been forfeited,the veteran's contractual interest cannotbe sold under execution; and the pur chaser at such a sale, if held, would acquire
no interest in the land and should not be allowed to assume the payment of the contract with theVeterans' Land Board ,inthe place of the veteran.

7. If a veteran's contract has been forfeited,the veteran's contractual interest Is not subject to execution or foreclosure and thereforethe State or countywould have
no authority to purchase said Interest at such a sale, if held, and hold it In trust for the taxing agencies Involved.Ron. J. Earl Rudder-:'.page 9.(S-183)'

8. If a veteran's contract has not been forfeited, and~aadelinquenttax ~suit is brought.

by the county in the name of th&%tate .ofTexas, and .judgment entered,
an &ecution.may be levled only on,the .lnt,er$st

owned by the 've~teran, and his interest~onlymay be sold'at,a foreclosure sale to s&tlsfy the judgment,and then only tn:the following'lnstanoes~:'(a)the veteran has had possession of the land for thriae yearsor more, or (b) .$heveteran has becomeincapacitated by reason oft illness,,

OT (0) the veteranhas died.

..9.Ifa veteran's contracthas been forfeitedwhen a'delinquent tax suit is brough~t

by'thia'countg

In~the'nameof the Stkte of Texas,.-a personal judgment only should be entered againstthe veteran, and neither a foreclosureof a tax lien nor an execution could-be Issued sgainst the land orthe 'veteran'sinterest therein.

'10. In the event thatdelinquent taxes have accrued against a tract of land being purchased through theVeterans' Land Program and the veteran's contract is forfeited and the land .isresoldby the Board, as provided in the 'Veterans' Land Act, the purchaser of the land at the second sale takes the land free from all past delinquent taxes. In such case.there Is no lien upon the land by reason of the prior delinquent taxes, and
a personal judgment for such taxes could be secured only against the original veteran.

11. If a veteran's contracthas not been forfeited and a creditor of the veteran obtains a judgmentagainst the veteran and the'veteran's contracthas not been in effect for three years, an execution cannot be;levied on theveteran's contractualin+ terest and said contractualinterestbe sold at foreclosure sale and the purchaser be substituted in place of the veteran on his contract of sale and purchase,except in the event that (a) the veteran has become incapacitatedby reason of illness, orHon. J. Earl Rudder - page 10 (S-183)

(b) the veteran has died and the interest of the veteran Is subject to a forced sale.

12. Our answer given to the above questionNo. 11 makes it unnecessary to
answeryour ~'questlon No. 12.

13. If a veteran's codtracthas not been forfeited and a creditor of the veteran obtains a judgmentagainst the veteran for
a debt and the veteran's contracthas. been in effect'for more than threeyears, an executionmay be levled on the veteran's contractual Interest and said contractual Interestbe sold under execution to a purchaser and said purchaserbi substituted
on the contract in lieu of the veteran, unless the veteran's interest is not subject to a forced'sale.

14. If a veteran's contracthas been forfeited and a-credltor of the veteran obtains a judgment against the veteran for debt, an executioncannot be levied on the veteran's interest unless the veteranredeems the land from the Veterans' Land Board and then only in the following instances: (a) the veteranhas had possession of the land for threeyears or more, or (b) the veteran-hasbecome Incapacitatedby reason of illness,'

or (c) the veteranhas died3 and fur ther provided that the veteran's Interest Is subject to a forced sale.

15. Our answer to the above question No. 14 fully answersyour qUeStiOn No. ~12.
16. After a.veteran's contracthas been forfeited,no taxes accrue thereon as loti& as It is held as a part of theVeterans' ~ Land Fund. In the event the veteran secures a reinstatementof his c,ontract, he shouldbeHon. J, Earl Rudder - page 1% (s-183)

required to pay the delinquent taxes that acerued before the forfeiture.

Yours very truly,

JOHN EEN SHEPPERD Attorney Qeneral of Texas

APPRQVED:

Ha* K.~Wall Reviewer

will D. Devils SpecialReviewer

L. W. Gray SpecialReviewer

Da& @pant First Assistant

John Ben Shepperd Attorney General

JAA:bt