Hon. C I J. Wilde 

County .Auditor 

Nuece s County 

Corpus Christi, Texas 

Opinion No. o-3672 

Re: Taxable situs of oil and oil 

products stored in Nueces County 

awaiting transportation or processing. 

This is in answer to your inquiry concerning the 

right of the state of Texas and Nueces 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 may be 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, and awaiting either: 

a. Transportation 

b.. Facilities for refining. 

‘!4. Oil produced outside the state of Texas 

and transported 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, Co J. Wilde, Caunty Auditor, page 2 (0-3672) 

“The owners of such oil are failing and 

refusing to render the same for 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 some other 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 come to rest within this state or is 

in transit, and we do not have all of the facts surrounding the 

transactions on which your questions are asked. A final decision of your questions, by lawsuit or otherwise calls for an examination of all of the facts, incl,uding the na t ure 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, and their various changes of ownership. If the final decision of your questions should be by lawsuit it is possible that 

some parts of the questions would be decided by a jury; and no 

human can anticipate with any degree of certainty what a jury 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 two related problems: 

?i..rst, whether or not the oil and refined products are in transit 

in interstate commerce, and second, whether or not the cril and 

refined products have acquired a taxable situs in Texas, but this 

latter problem only arises when the owner is domiciled outside 

of the state. 

On this first problem, which concerns interstate commerce we find statements in 1 COOLEY ON TAXATION, Fourth ,Edition, 

as fo i lows: 

“A tax on property in transit from one state 

to another is invalid because an illegal burden on 

interstate commerce; and this 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 ON TA;CATION, Fourth Edi-. 
. . 

Bon. C. J. Wilde, page 3 (0-3672) 

"What is the rule where the property is temporarily at rest? May the 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 and the property is held in storage 

or at distributing points to be delivered to buyers 

or reshipped to other places. Merchandise may cease 

to be interstate commerce at an intermediate point 

between the place of shipment and ultimate destination, and if kept at such point for the use and 

profit of the owners and under the protection of the 

laws of the state, it becomes subject to the taxing 

power of the state. ***.N 

Fourth,Edition, 821). 

(1 COLLEY ON TAKATION, 

!?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 commerae is interstate or intrastate is a practical 

question to be determined by the facts of the particular case." 

35 RARV,ARD LAW REVIEW 620. In the case of PRAIRIE OIL & GAS 

COMPANY v. ERRARDT, 244 Ill. 634 

the interstate commerce clause o h 

91 N&. 680, it was held,that 

the Federal Constitution prohibited a state from levying ad valorem taxes against oil that 

was being moved from the state of Kansas to the state of Indiana through a pipe line, even though some of 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 

ad valorem taxes., One of the leading cases on the question is 

the case of CARSON PETROLEUM COMPANY v. VIAL 279 U.S. 95, 73 

L.Ed. 626, 49 S.Ct., 292, in which it was heid that oil in 

tanks in, a seaport in Louisiana that had been brought from other states to that port for the sole purpose of export by ships 

to foreign countries and which was being held in said tanks for 

the purpose of allowing enough to accumulate to make a shipload 

or until a ship arrived to load the same was not subject to 

state ad valorem taxes because the storage of the oil in said 

tanks was part of a continuous interstate and foreign shipment. 

A different conclusion was reached in some other tax cases lnvolving the movement of oil between states, one of those being 

the case of PRAIRIE OIL & GAS COMPANY 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 ad valorem taxes by virtue 
Hon. 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, and a large amount of it 

remained in storage in the tanks 'a long 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, 178 Okla. 484 .63 Pac. (,2d) 6, it was held 

that oil was subject to state ad v ai orem taxes in a case in 

which it was stored in tanks from four months to a year by an 

interstate pipe line operating company for 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 ad valorem taxes when it was shown that the 

oil had been brought from Arkansas by a pipe line carrying 16,- 

000 barrels a day and that a part of it was diverted and sent to 

a refinery in Texas by a pipe line carrying 8,000 barrels a day 

and that the remainder stayed in storage in said tanks or was 

sold locally. The facts 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 we have found in a case involving this question was made by Chief Justice Hughes in the 

case of STATE OF MINNES0T.A v.BLASIUS, 290 U.S. 1, 78 L.Ed. 131, 

54 S.Ct. 34, as follows: 

'I*** the states may not tax property in transit 

in interstate commerce., But, by reason of a break in 

the transit, the property may come to rest within a 

state and become subject to the power of the state to 

im;,;se a nondiscriminatory 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, 73 L.Ed. 626. 

'I***. The question is always one of substance, 

and in 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 come to rest within a state, 

being held there at the pleasure of the owner, for 

disposal or use, so that he may disnose of it either, 

within the state. or for shiumggt lsewhere. as h;tg 

inte rest dictates, it is deemed toebe 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 by which it can be determined whether or not the oil 

and refined products in question are exempt from state ad valorem taxes by virtue of being in transit in interstate commerce. 

We will now take up the second problem in connection with the 

question ‘of whether personal property in Texas is subject to 

state ad valorem taxes, and that 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 

a well 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 CAR COMPANY v. PENNSYLVANIA, 141 U.S. 

18, 35 L.Ed 613, 11 S.Ct. 876. GREAT SOUl’HEFUi LIFE INSURANCE 

COMPANY v. CITY OF AUSTIN, 113 Tex. 1, 243 S.W. 778. A statement of the rule concerning personal property acquiring a taxable situs in a state other than the owner’s domicile is stated 

in 2 COOLEY ON TAXATION, 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 

and not 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 and for 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 

-one whether such a tax constitutes an unlawful 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 and when there is a 

question of the owners s domicile being outside of the state. If 

it is determined that the oil and refined products about which you 
Hon. C. J. Wilde, page 6 (0-3672) 

ask are subject to ad valorem taxes under the laws of Texas 

it must be decided whether or not Nueces C,ounty is 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 and the 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 may not be easy to decide if the owner 1s domicile is outside of Nueces County. We do not have the detailed facts on 

your questions and therefore we will only endeavor to state 

the general rules applicable in such cases. 

The test 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 same as 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 end working 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, and addressed to 

Hon. E. P. Jennings, County Auditor of Herdin County. In that 

case the facts showed no 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~t collect ad valorem 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 PIPE LINE COMPANy V. I:OMMONWEALTH, 258 Hy. 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 :in dealing with this question are Article VIII, Section 

2, of the Constitution of Texas, and Articles 7151 and 7153, of 

the Revised Civil Statutes of Texas. Article VIII, Section 2, 

of the Constitution reads in part as follows: 

“All property, whether owned by persons or 

corporations shall be assessed for taxation and the 

taxes paid in the county where situated, but the Legislature may, by a two-thirds vote, authorize the 

payment of taxes of non-residents of counties to be 

made at 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 and April 30 of each year, when required by the assessor, with reference to the quantity 

i 
. . 

Hon. C. J. Wilde, page 7 (O-3672) 

held or owned on 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 and personal, except 

such as is required to be listed and assessed 

otherwise, shall be listed and assessed in the 

county where it is situated; and all personal 

property subject to tax#ion and tempor 

removed h rom the state oh county, shall ,‘ly 

listed and assessed 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 LIFE INSURANCE COMPANY v. CITY OF 

AUSTIN, supra, the Supreme Court of Texas said: 

“OUT Constitution, 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.t for the exercise of the taxing power and to confine the exercise of that 

power to ihe subjects of taxation within that 

unit. It did not define what was meant by the 

w,ords ‘where situated. I Since St had reference 

to the t power it evidently meant property 

where si I-= 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 2 Pac. 254. San Francisco v. Mackay 

(,::.C.) 23 Fed. 602. i507. 

“Under the common law ‘mobilia sequuutur 

personam’ was a well establIshed maxim, and personal property of every description was taxable 

only at the domicile of its owner regardless of 

its actual location. This is stifl the basic 

principle upon which the taxation of pemonal 

property rests. 26 R.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 and taxing 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 

2b R.C.L 3 244, 

pp- 276, 277; Pullmatirs Palace Car Co. ;. 

sylvania, 141 U.S. 388, 24 Sup.ct. 109, 48'?&. 

232.1' 

&n the case of CITY OF GALVESTON v. HADEN, 214 S.W. 766, the 

ourt of Civil Apl~als at Galveston, said:, 

,I***. The law 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, and both 

litigants appear to proceed upon the assumption 

that such is the rule, differing only as to whether 

this property was shown to have a situs where located. The question, then, upon this feature of 

the case turns in this court,, on whether or not the 

evidence was sufficient to support the trial court's 

finding that the property as to which any recovery 

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 owned by a'person living in Oklahoma had acquired a taxable situs in Texas is discussed in the 

case of HARDESIY BROTHERS v. FLEMING, 57 Tex. 395. O,ther cases 

dealing with similar questions are COURT v. O'CONNOR, 65 Tex. 

;3$ a$ CITY OF GALVESTON V. J. M. GUFFEY PETROLEUM CO. 

We find a statement on this question in 2 COOl!E%N 

T,tiIOi;; Fourth Edition, 975 as 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 *** 

'IAs to the place in ;theestate where tangible 

personal property is taxable, the same rules 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 

We regret that we cannot answer each of your questions Icyest’ or %o” but in view of the fact that they are 

fact questions and t hat 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 OF TEXAS 

By /s/ Cecil C. Rotsch 

Cecil C. Rotsch, Assistant 

APPROVED JOL 22, 1941 

/s/ Grover Sellers 

FIRST ASSISTANT ATTORNEY GENERAL 

APPROVED: OPINION COMMITTEE 

BY: BWB, CHAIRMAN 

CCR:ob:wb