Hon. CI J. Wilde

County .Auditor Nueces County Corpus Christi, Texas Opinion No. 

### o-3672 Re: Taxable situs of oil andoil Nueces County products stored in awaiting transportation or processing. This is in answer to your inquiry concerning the right of the state of Texas andNueces County to assess and levy ad valorem taxes against certain crude oil and oil products, which inquiry reads as follows:

“There are vast quantities of oil, or oil products, stored in Nueces County. This oil and oil product’s maybe classified as follows:

“1. Oil produced in Nueces County and stored in lease storage awaiting transportation to concentration points. “2, Oil produced in Nueces County and stored at concentration points in Nueces County awaiting el.ther:

a. Transportation b, Facilities for refining.


### “3. Oil produced in the state of Texas and transported to concentration storage in Nueces County, andawaiting either:

a. Transportation b.. Facilitiesfor refining.


### ‘!4.Oil produced outside the state of Texas andtransported to concentration storage in Maces County awaiting either:

a. Transportation b. Facilities for refining. llse Refined products stored in Nueces County processed from each classification above Itemized.Han, CoJ. Wilde, CauntyAuditor, page 2 

### (0-3672)

“The owners of such oil are failing and refusing to render the samefor taxation, asserting as a basis for such failure or refusal tha.t the oil is in Interstate Commerce, and as such is not subject to taxation in either Nueces County or the state of Texas.” Your inquiry involves first, the right of the state of Texas to tax said property, and second, whether said property is taxable in Nueces County or someother Texas County in the event it is taxabla in Texas.

It will be impossible for us to answer your questions categorically because they each involve a question of fact as to whether the property has cometo rest within this state or is in transit, andwedo not have all of the facts surrounding the transactions onwhich your questions are asked. Afinal decision of your questions, by lawsuit or otherwise calls for an examination of all of the facts, incl,uding the na ure t and composition of the products, their origin, the route they followed, the reasons for thelr stay in Nueces County, their length of stay, the method of their processing and manufacture, their destination, andtheir various changes of ownership. If the final decision of your questions should be by lawsuit it is possible that someparts of the questions would be decided by ajury; andno humancan anticipate with any degree of certainty what ajury will do. Therefore, we can only answer your questions by stating the general rules that control in the situations about which you ask,

In determining the right of the State of Texas to tax said property, we are confronted with tworelated problems: ?i..rst, whether or not the oil and refined products are in transit in interstate commerce, andsecond, whether or not the cril and refined products have acquired a taxable situs in Texas, but this latter problem only arises whenthe owner is domiciled outside of the state.

Onthis first problem, which concerns interstate commerce wefind statements in 1 COOLEY ONTAXATION,Fourth ,Edition, as foilows:

“A tax on property in transit from one state to another is invalid because an illegal burden on interstate commerce; andthis is so although the articles taxed belong to citizens of the taxing state. This includes oil in transit through pipe lines, and sheep being driven through a state to another state.” tion, 

### 816.1 (1 COOLEY ONTA;CATION,

Fourth Edi-.. .



### Bon.C. J. Wilde, page 

### 3 (0-3672)

"Whatis the rule where the property is temporarily at rest? Maythe state where it then is tax it although it is the intention of the owner to remove the property to another state in the near future? The gener,al rule is that property temporarily at rest is taxable, as where the transit has been interrupted andthe property is held in storage or at distributing points to be delivered to buyers or reshipped to other places. Merchandise maycease to be interstate commerce at an intermediate point between the place of shipment andultimate destination, andif kept at such point for the use and profit of the owners andunder the protection of the laws of the state, it becomes subject to the taxing power of the state. ***.N Fourth,Edition, 

### 821). (1 COLLEY ONTAKATION,

!?L ere have been several tax cases involving the'movement of oilfrom one 'state to another, but it is difficult to arrive at a rule that can be applied to every fact situation. "Whether commeraeis interstate or intrastate is a practical question to be determined by the facts of the particular case." 

### 35RARV,ARD

LAW REVIEW

620. In the case of PRAIRIEOIL&GAS COMPANY

v. ERRARDT,

244 Ill. 

### 634 the interstate commerce clause oh 

### 91N&. 

### 680,it was held,that the Federal Constitution prohibited a state from levying ad valorem taxes against oil that was being movedfrom the state of Kansas to the state of Indiana through apipe line, even though someof the oil accumulated and stayed for several days in working tanks at the pumping stations along the line by virtue of the oil not moving fast enough through sections of the line. In the case of STATE v. EMPIRE

OIL&REFINING

COMPANY,

171 Okla, 138, 4 Pac. (2d) 127, it was also held that oil moving continuously through a pipe line from one state to another was not subject to state advalorem taxes., Oneof the leading cases onthe question is the case of CARSON PETROLEUM

COMPANY

v. VIAL 279 U.S. 95, 73 L.Ed. 

### 626,49S.Ct., 

### 292,in which it was heid that oil in tanks in, a seaport in Louisiana that hadbeen brought from other states to that port for the sole purpose of export by ships to foreign countries andwhich was being held in said tanks for the purpose of allowing enough to accumulate to makea shipload or until a ship arrived to load the samewas not subject to state advalorem taxes because the storage of the oil in said tanks was part of a continuous interstate and foreign shipment. Adifferent conclusion was reached in someother tax cases lnvolving the movementof oil between states, one of those being the case of PRAIRIEOIL&GASCOMPANY V. JEFFERSON

COUNTY,

76 Fed. (2d) !&5, in which it was held that oil in tanks at a seaport in Texas was subject to state advalorem taxes by virtueHon. C. J. Wilde, page 4 

### (o-3672),

of the fact that it was stored there for the purpose of exporting part of it, but not all 5y ship, anda large amountof it remained in storage in the tanks 'along time during which the owner endeavored to sell it locally without exporting it by ship. In the case of MAGNOLIA PEL'ROLEUM~COMPANY v. BOARD

OF COUNTY

COMMISSIONERS,



### 178Okla. 

### 484 .63Pac. (,2d) 

### 6,it was held that oil was subject to state advaiorem taxes in a case in which it was stored in tanks from four months to ayear by an interstate pipe line operating companyfor the purpose of having a supply available in the event the pipe line's regular source of supply was cut off because of breaks in the line or other reasons. In the case of GULF REFINING

CO.v. PHILLIPS 11 Fed. (2d) 

### 967,it was held that oil in storage tanks in LouIslana was subject to state advalorem taxes whenit was shownthat the oil hadbeen brought from Arkansas by a pipe line carrying 

### 16,- 000 barrels a day andthat a part of it was diverted and sent to a refinery in Texas by a pipe line carrying 8,000 barrels a day andthat the remainder stayed in storage in said tanks or was sold locally. Thefacts in each of the above cited cases are different, and it is clear that in each case the court has sought to determine whether or not there was "a continuity of transit" of the oil at the time the attempt to assess the tax was made. The best statement of the rule that wehave found in a case involving this question was madeby Chief Justice Hughes in the case of STATEOFMINNES0T.A v. BLASIUS,290 U.S. 1, 

### 78L.Ed. 

### 131, 54 S.Ct.

### 34,as follows:

'I*** the states maynot tax property in transit in interstate commerce., But, by reason of a break in the transit, the property maycometo rest within a state andbecome subject to the power of the state to im;,;se anondiscriminatory prop;;;y tax ***. The 'CruCl auestion.l in determinina the the state's tqieg power mav-thus be exerted. is tha: of transj&.' CARSON

PETROLEUM

COMPANY

v. VIAL, 279 U.S. 

### 95,101,

### 49 S.Ct. 292, 293, 

### 73L.Ed. 

### 626.
'I***.The question is always one of substance, andin each case it is necessary to consider'the particular occasion or purpose of the interruption during which the tax is sought to be levied***. "Where property has cometo rest within a state, being held there at the pleasure of the owner, for disposal or use, so that he maydisnose of it either, within the state. or for shiumggt lsewhere. as h;tg inte rest dictates, it is deemedtoebe a part of the general mass of property within the state and is thus subject to its taxing power ***.I' (Underscoring ours).Hon. C, J. Wilde, page 

### 5 (O-3672)

The preceding paragraph has been an attempt to arrive at a rule bywhich it can be determined whether or not the oil andrefined products in question are exempt from state advaloremtaxes byvirtue of being in transit in interstate commerce. Wewill nowtake up the second problem in connection with the question ‘of whether personal property in Texas is subject to state advalorem taxes, andthat is this: Even though the property is not in transit in interstate commercg,if the owner is domiciled outside of the state it must be determined whether or not the property has acquired a taxable situs in Texas. It is awell established rule of law that personal property is only taxable at the domicile of the owner, regardless of its location at the taxing date, if it has not acquired a taxable situs elsewhere. PULLMAN’S PALACE

CARCOMPANY

v. PENNSYLVANIA, 141 U.S. 

### 18,35L.Ed 

### 613,11 S.Ct. 

### 876.GREAT SOUl’HEFUi

LIFEINSURANCE COMPANY

v. CITYOFAUSTIN,113 Tex. 1, 243 S.W. 

### 778. Astatement of the rule concerning personal property acquiring a taxable situs in a state other than the owner’s domicile is stated in 2 COOLEY

ONTAXATION,Fourth Edition, 

### 982,as follows:

“In order to acquire a situs in a state or taxing district so as to be taxable in the State or district regardless of the domicile of the owner andnot taxable in another state or district at the domicile of the owner, tangible personal property must be more or less permanently located in the state or district. In other words the situs of tangible personal property is where it is more or less permanently located rather than wbrre it is merely in transit or temporarily andfor no considerable length of time. If tangible personal property is more or less permanently located in a state other than the one where the owner is domiciled, it is not taxable in the latter state but is taxable in the state where it is located* If tangible personal property belonging to one domiciled in one state is in another state merely in transitu or for a short time, it is taxable in the former state, and is not taxable in the state where it is for the time being. Often,. if not usuallv, a tax imoosed bv the state where orooertv is in tran&- %Fc$ves interstate commerce, in which case the a i n is not one of taxable situs but the broader -onewhether such a tax constitutes anunlawful interference with interstate or foreign commerce. ***‘I The foregoing has been a discussion of rules concerning the right of the state of Texas to tax personal property when there is a question of interstate commerce andwhenthere is a question of the ownerss domicile being outside of the state. If it is determined that the oil andrefined products about which youHon. C. J. Wilde, page 

### 6 (0-3672)

ask are subject to advalorem taxes under the laws of Texas it must be decided whether or not Nueces C,ountyis the county in which such taxes should be levied. That is a,question of whether or not the oil and products have acquired a taxable situs in Nueces County. If the owner’s domicile is in Nueces County andthe property is also located in that county (and there is no question of interstate commerce), the property is clearly taxable in that county+ But, it is a fact question that maynot be easy to decide if the owner1s domicile is outside of Nueces County. Wedonot have the detailed facts on your questions andtherefore wewill only endeavor to state the general rules applicable in such cases.

Thetest of whether or not personal property has acquired a taxable situs in a county other than the county of the owner’s domicile is the sameas the test of whether or not such property has acquired a taxable situs in a state other than the state of the owner’s domicile. The question of oil in a pipe line endworking tanks being taxable in a county other than the owner’s domicile was considered in Attorney General’s Opinion No. 

### O-885,dated June 22, 

### 1939,andaddressed to Hon. E. P. Jennings, CountyAuditor of Herdin County. In that case the facts showedno oil was stored, but that all of the oil, including the oil in the working tanks, was actually in transit; and, it was held in said opinion that the county in which said oil was located on the taxing date (January 1st) could no~tcollect advalorem taxes on the same, if it was owned by a person or corporation whose domicile was in another county. That opinion was based on the case of CUMBERLAND PIPELINECOMPANyV. I:OMMONWEALTH, 

### 258Hy. 

### 90,79 s.w.(2d) 

### 366,which involved o,il moving from one county to another in a pipe line. The constitutional provisions and statutes that should be considered :indealing with this question are Article VIII, Section 2, of the Constitution of Texas, and Articles 

### 7151and 

### 7153,of the Revised Civil Statutes of Texas. Article VIII, Section 2, of the Constitution reads in part as follows:

“All property, whether ownedby persons or corporations shall be assessed for taxation andthe taxes paid in the county where situated, but the Legislature may, by atwo-thirds vote, authorize the payment of taxes of non-residents of counties to be madeat the office of the Comptroller of Public Accounts ***. ” Article ‘715’1,Revised Civil Statutes, reads in part as follows:

“Al.1 property shall be listed for taxation between January 1 andApril 

### 30of each year, whenrequired by the assessor, with reference to the quantity i. .

Hon. C. J. Wilde, page 

### 7 (O-3672)

held or ownedon the first day of January in the year for which the property is required to be listed or rendered ***” Article 

### 7153,Revised Civil Statutes, reads as follows:

“Al.1 property, real andpersonal, except such as is required to be listed andassessed otherwise, shall be listed andassessed in the county where it is situated; andall personal property subject to tax#ion andtempor removed h

romthe state oh county, shall ,‘ly listed andassessed in the county of the re - dence of the owner thereof, or in the count where the principal office of such owner is situated.” In the case of GREAT SGIJTHERN

LIFEINSURANCE

COMPANY

v. CITYOF AUSTIN,supra, the SupremeCourt of Texas said:

“OUTConstitution, therefore, in declaring that property shall be taxed where situated, h,ss done no more thm declare the common-law rule. The purpose of the Constitution in declaring that property should be taxed in the county where situated, was merely to define the general j~urisdictional un3.tfor the exercise of the taxing power andto confine the exercise of that power to ihe subjects of taxation within that unit. It did not define whatwas meantby the w,ords ‘where situated. I Since St had reference to the t power it evidently meantproperty where siI-=

uated for the purposes of taxation under the general principl&@ of law as then understood. County Treasufer ‘v. Webb&Garrison, 11 

### Minn.500 (Gil.378); San Francisco v. Lux, 

### 64 Cal. 

### 481 2Pac. 254. SanFrancisco v. Mackay (,::.C.) 

### 23Fed. 602. i507.

“Under the commonlaw ‘mobilia sequuutur personam’ was awell establIshed maxim, andpersonal property of every description was taxable only at the domicile of its owner regardless of its actual location. This is stifl the basic principle uponwhich the taxation of pemonal property rests. 

### 26R.C.L. 3

### 241,pp. 273, 274. But even prior to the Revolution the principle had been abrogated to the extent that, as between different towns andtaxing districts, certain classes of tangible personal property had a taxable. ,

Hon. C. J. Wilde, page 

### 8 (Q-3672)

situs where employed in business of the domicile of its owner* regardless 

### 2bR.C.L 3244, pp- 

### 276,277;Pullmatirs Palace Car Co. ;. sylvania, 

### 141U.S. 

### 388,24Sup.ct. 

### 109,48'?&. 232.1' &nthe case of CITYOFGALVESTON v. HADEN,

### 214S.W. 

### 766,the ourt of Civil Apl~als at Galveston, said:,

,I***. Thelaw seems to be well settled,in Texas that the proper place to tax personal property is the residence of 'the.owner, provided it has not acquired a situs for purposes of taxation elsewhere, in which instance it is to be taxed where situated. Constitutiouof Texas Art. 

### 8 3 11; R.S. Arts. 7510 and 7514; City oh Austin'v. Insurance Co., 211 S.W. 482. Indeed, the cases cited in the foregoing conclusions so hold ticularly the Guffey Case, with reference c paro such physical property as is 'here involved, andboth litigants appear to proceed upon the assumption that such is the rule, differing only as to whether this property was shownto have a situs where located. The question, then, upon this feature of the case turns in this court,, onwhether or not the evidence was sufficient to support the trial court's finding that the property as to which anyrecovery for taxes was denied had in fact acquired's situs outside of the city of Galveston, where its owner resided.11 The question of whether cattle ownedby a'person living in Oklahomahad acquired a taxable situs in Texas is discussed in the case of HARDESIY

BROTHERS

v. FLEMING,57Tex. 395. O,ther cases dealing with similar questions are COURT v. O'CONNOR,

### 65Tex. 

### ;3$ a$ CITYOFGALVESTON V. J. M.GUFFEY

PETROLEUM

CO. Wefind a statement on this question in 2 COOl!E%N T,tiIOi;; Fourth Edition, 

### 975as follows:

I'*** Its taxable situs is where it is more or less permanently located, regardless of the domicile of the owner. It is well settled that the state where it is more or less permanently located has the power to tax it although the owner resides out of the state, ***. 11*** 'IAsto the place in ;theestate where tangible personal property is taxable, the samerules as to

### Hon.C. J. Wilde, page 9 (O-3672)

situs apply as where the question is whether the situs is inside or outside the state provided it is not otherwise regulated by statute. *:**.If
Weregret that we cannot answer each of your questions Icyest’or %o ” but in view of the fact that they are fact questions andthat we do not have all of the facts before us we have given you the foregoing rules and suggest that you apply said rules to each fact situation. Yours very truiy ATTORNEY

GENERAL

OFTEXAS By/s/ Cecil C. Rotsch Cecil C. Rotsch, Assistant APPROVED

JOL22, 1941 /s/ Grover Sellers FIRSTASSISTANT

ATTORNEY

GENERAL APPROVED:OPINIONCOMMITTEE BY: BWB,CHAIRMAN CCR:ob:wb