ESA~WRNEY GENERAL 

OF TEXAS 

AUSTIN, TEXAS 78711 

The Honorable Jimmy Morris 

Criminal District Attorney 

Navarro County 

Corsicana, Texas 75110 

Deat Mr. Morris: 

Opinion No. H- 332 

Re: Whether town is entitled 

to recover city sales tax 

from tb.e Comptroller where 

its incorporation has been 

judicially determined to be 

void. 

You ask whether a town the incorporation of which has been declared 

null and void in a final district court judgment is entitled to receive the 

city sales taxes collected on its behalf by the Comptroller. 

In 1972 the town of Angus was purportedly incorporated pursuant to 

Articles 1133 and 1134, V. T. C.S. The town thereupon elected to adopt 

the local sales and use tax permitted by Article 1066c, V. T. C. S. .But on 

July 23, 1973, the district court of Navarro County set aside the attempted 

incorporation of Angus and declared it illegal, void, and of no effect. 

There has been no appeal from that decision. During the second quarter 

of 1973 and for some time thereafter, city sales taxes had been collected 

by the Comptroller on behalf of Angus. You ask whether the town of 

Angus is entitled to receive the sales taxes collected for it during 1973 

by the Comptroller despite the judicial declaration that its incorporation 

was void. 

In resolving questions similar to the one you present, the courts have 

drawn a distinction between de facto municipal corporations and tho,se’that 

are void ab initio. A de facto municipal corporation is created when a 

community has made a good-faith attempt to organize in the method prescribed by existing law and has at least colorably complied with that law. 

Hunt v. Atkinson, 12 S. W. 2d 142 (Tex. Comm, App. 1929), vacated on other 

grounds, 17 S. W. 2d 780 (Tex. Comm. App. 1929). With respect to its 

obligations, a de facto corporation is for all intents and purposes, the 

same as a de jure corporation: its acts and contracts are as binding on it 

p. 1536 
The Honorable Jimmy Morris, page 2 (H-332) 

as are those of a de jure corporation. Shapleigh v. San Angelo, 

167 U.S. 646 (1897). A de facto corporation may levy and collect 

taxes to. fhe same extent as a de jure corporation. See generally, 

39 Tex. Jur. 2d. Municipal Corporations, Sec. 57. p.407. 

On the other hand, where there is no authority for its de jure 

existence, a municipality is void ab initio. The.legal effect of a 

judicial determination that an attempted incorporation was void is 

described in the following passage from Hunt v. Atkinson, supra: 

A corporation, for the existence of which de jure 

there is no law, cannot be a de facto corporation, 

and its existence may be attacked directly or collaterally, or even ignored since it is in law nothing. 

It affords no rights and presents no defenses at any 

time, or as to any person. 12 S. W. 2d at 145. 

Thus when an attempted incorporation is declared void, the municipality 

purportedly created is treated by the law as if it never existed, and 

its acts and contracts have no effect whatsoever. 

The attempted incorporation of the town of Angus has been set 

aside and declared illegal, void and %f no effect. In its judgment the 

district court stated that there is not now nor has there ever been a 

legally incorporated town of Angus, and it ousted all city officials 

from the offices they purportedly held with no right to assert any 

powers or exercise any functions af those offices. The incorporation 

of Angus having been declared void, the town never had the authority 

to levy and collect the city sales tax, and those who paid it are entitled 

to a refund of their money. Article 20.10, Taxation-General, V. T. C. S. 

Since it has neither de jure nor de facto status, the town of Angus and 

those purporting to represent it are certainly not entitled to receive 

any city sales taxes from the Comptroller. 

p0 1537 
The Honorable Jimmy Morris, page 3 (H-332) 

SUMMARY 

A town the incorporation of which has been .declared 

null and void in a final court order is not entitled to 

receive the city sales taxes collected on its behalf by 

the Comptroller. 

Very truly yours, 

A 

v Attorney General of Texas 

APP OVED: 

R 

DAVID M. KENDALL, Chairman 

Opinion Committee 

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