OFFICE OF THE ATTORNEY GENERAL OF TEXA5 

‘AUSTIN 

Bonorable George H. 3heppord 

Comptroller of Publlo Aacouuts 

Austin, Texas. 

Dear Sir: 

._ 

its aoknowledge recc 

.-. two letters addreeeed to you 

Judg3 of iC3nt County, rslatin 

Oote Ad valorenl 

And 22 In Blook 

Hudsp,eth County, 

and receiving bids Or prbty depository of the fuads 

Coimlesionsra’ Court of that 

clnwmy Fern, 1931, soloct as 

First IZatioml Bank of Sa-&on, 

Theae bondn 

T. E. Xurdoch and several 

.other individuals vero sureties on both of. these 

bonds, each furnishLag n financial statement At the ‘. 

tine of the preaontatlon of the b6ndc. 0ti’I.l~. MLIP- 

‘doch’o fi.ncx&~l statment there was lletsd, onon& 

other p;lopsl%p, 3200 acres of grcis8 land in IkIdsi>eth 

County, valued on the ototosaat at $24,000.00, aSninet 

,vhich $hsro vae’listad 01i iadebtpclmos to. the State 

mud Of $48~~.00. 

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Konorablc GeorEe II. Sheppard, page 2 

“The Fir.st National Be& or Jayton, Tems, fail-. 

:ed on or about the 8th day of June, 1932, defaulting 

on the above wentioned bonds. Suit was filed by Kent : ’ 

County on the bonds end depository contract, which, ‘. 

upon trial in the Federal District Court for the ‘. ‘.. -. 

Northern District of Texae, at Lubbock, resulted in. i:. ;‘. .‘; 

a’ judgmnt in favor of ~Kent County .against all of the ., 

‘.i.. defendant, bondmen, including T. E. Murdoch, for a. : . . . ..’ : 

:. total ~Drinoipsl amount of .$100,417.20. This judg- _, 

:,ment also foreclosed a dead of trust lion 02 the a- 

., ‘. 

bove desoribod land Given by Kr. Murdoch as an iq- I:‘ ‘.. ’ 

demity security in oomection vith .thg.borrds. :: .’ ~. 

.” : 

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‘The ju@nont just -ti%ntion& was rendered on -‘I. :.i ~. 

. ‘Sul$ 18, 1934. Tboreafter, AM on’th% 25t.h day of. ‘.: ;, .:..:~““:._. 

May, 1935, T. E. Murdoch coweyed the land to,Kent. I.: : ~’ * 

Oounty, Texas.: ‘a polltiaal oubdlvlsion of the State;‘:.. 

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of T&m’, 

Murdoch vas 

r8citti a oonsideration of Ten Dollarn. :, 

insolvent and by reason ‘of this judgmnt KentCounty held far raore than.fifty per cent 

OS the claims against him, At the ttie this deed 

was sxecuted the CozmissiomraI. Court satisfied it-. ~’ 

self, that this vas the only .propertg ovnod by Isir, 

Murdoch that vas subject to execution; The true con-:, 

sideration for the deed vas an intention on the part .i 

of all concernad to apply whatever the county ehould 

evep receive for the.land on the judgment nontlonedabove, vhiah could never’ be collected~ in full; These 

proceeds w%r% aud are to go pro-rata to the separate 

public funds on deposit in the depository bank at, I 

the time of its failure. ‘I 

‘Kent County has’continued to om th% .lend for 

the reasons that there has never been a fair offer 

for the land, notvithstanding that the county has .’ 

repeatedly tried to find a buyer for same, and has,: 

therefore, continued to hold the same in en attempt 

.to preserve the public funds of the county. It has 

never been leased or rented end the county has received nothinS for Its use. 

* %a think the e uity ‘owned by Kc& County in the 

land IS worth about $ 25OG.00, ma bolleve the COUI;; 

will evoatually realize that amount from mm. 

Is unpatented State School lend and the porcanncllt~ 

echo01 funds holds a lien for the unpaid pumhnao 

price therefor, 
. 

Ronorable Gooree H. 8heppard! pai8 3 

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*At the time of the failure of the depository 1 

bank there vas on d%posit th%r8in the following amounts to the &edit of each reepectlve fund: 

, . . . . . 

aComvio~ School District State & county :i ~ 

$1,387.2X :.. it 

.: 

tenanco 

CommmdSchool District Schoolhouse :. 

... Common School District Rural &I 

Common School District Building : :. 

County AvaIlable School 

County Permanent School 

County Administration 

Court &US8 Bond 

Sail Bond .’ 

Road and Bridge Dond 

.‘.: ?SwialRoad District No, 1 Bond 

Special Road Distrtct 110. 2 Dond 

Special Road District ho. 7 Bond 

Gonaral Bund;Herrant Sinking 

County PUghway Warrant Sinking 

‘. Road & Bridge Warrant Sinking 

: General Fund 

Jury Fund’ .’ 

Rood & &,&Q8 Fr;nd 

. Permanent Improvement Fund 

Oounty Righway Fund ._ 

“There has been reimbursed to’ each of the ‘above 

funds; from eOll8CtiOnS made from the receiver of the 

; ‘~ 

defunct bank and from the bondsmen, thirty-four per _. 

ceirt of the above amounts, not counting the land 

abOQ% described. . . 

‘At the.time of the failure of the depository’ 

‘bank Rent County was not operating on a cash basi.3, 

eome of the funds above appearing a3 tourrent fundst 

being several years behind, There vas outstanding 

script, issued by the county clerk, again3t each of 

the laot five named funds vhlch had been r%Slatorcd 

by the treaouror, but on whhich there had been no checks 

issued, for the reason that ecriy provlou3ly rcgietered 

by the treasurer va3 outstandinS in eufficlent amounts 

to take up the mon%y then on deposit with the depository 3.3 .%houn above. ” 
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Honprable George H. Sheppard, page 4 

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‘Kent Countjr ovns Se&ions Nosi 21) and 25 in : 

* Blook 74 and Section 5 in Blook 75, Public School . ‘.. 

,’ Lands In Hudspeth County ln addltlon to the Irinds . 

’ ’ desorlbed ln my letter to you of thls date and here-~ ‘1. ’ 

.’ 

.. vith attached. 

. The county acquired title to theao 

. 1: three sections in a manner different from that by :.;:‘. 

.‘. .~.I vhlch they ecqulred, title to the land described in ..:~ _;:. . 

~~~.Ythe ”’attached letter, In addition to the Information ‘_ 

“.’ .,; given in the other letter, you are advised In eon- :.’ : ..::i’-.‘~ 

sgeotlon with these three se&ions as follove: ,: :;I:::, .A. 

. ~).. %hen the First National ‘&k of Jayton, Tex&l. ~~~~~,, .“’ ’ 

.‘ic::i.N failed the Comptroller of Currency appointed a re- ..:.; .:.: ‘: :._ 

: ; celver therefor, After a portion of the assets of ,.: .;-. 

‘,- the defunct bank had been liquidated, the Coniptrollel* 

:~ ” of Currency and a court of competent juris’dlctlton au- . . 

,:.... .; :. tho&ieed and ordered the sale ,oS the rem- as- 

.: sets to Kent County, it having been the highest 

_jl;.” j:;; 

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-‘.:l :{ bidder, for eaid assets and ovnlng practically all’ : ,.‘_:_.! 

:::.’ of the claims agalnst the defunct bank4 A deed to : “‘!,; .;. 

.‘.,l.‘z:; theeo three seot+o!@ of land was executed by the re-. .’ ._, !::. 

: .: .? oelver and accepted by qhe oounty in whloh the con- : .‘. 

i ‘.:““: sideration bias reolted (Is $10 +d, other good and ~~: ~.: 

’ .% valuable oonslderat ion gald; .e .:.. 

i :: .. ,j 

,.....’ : ;‘h.‘- aHi& & exceptiofi & the fep,ta as hepeh si.iii”’ :, :‘i ’ 

: ;i.:,+‘ed,. the situation as to this land Is the same aa’ aet ~ -‘:‘:..k 

*... y-_ :’ out In the attached ,lettel?in : : :~..‘;:.::.,;-;. 

_:. i _. .:.., : : ‘~~~~~r.i.~.:~ :.y. ‘-. 

%&tiave been further advised that texes levied a&l asaegsod-‘aialnst 

thle land for State, county, and sohool purposes are delinquent for 

ohe ‘.or more years prior to the time Kent County acquired title 

thereto. Also that taxes are delinquent for eoveral yeazw since 

the land vss acquired by sald county+ owe are not advised vhether 

’ Kent ,~ County has a since It acquired title to the land, legally and 

annually rendered the came for taxation; This fact may or may not 

become Important In detorminlng the questions to be hereinafter 

considered; Those questions may be stated as follovsr ..~ 

. (1) Vae the ,land, after It vai acquired 6y kont 

County, subject to taxation-by either the State of 

.Texas, JWdspeth County or the school district? 

: 

(2) le Kent County, In order to protect Its Fnterest In the land, required to pay tho Stato’of Texas, 

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Bonor?ble Georg6 Ii. Sheppard,, page 5 : .: 

Hudspeth County, or the school district the dolinwent taxes vhich aoorued against the land before ” 

- it, acqulrad same? .:. 

.- The lquage used by Judge Funderburk concerning the 

question of the exsmptlon from taxatloL of the propert Involved 

in the case of City of.Abilene v. Stete, 113 8. Ii. (26 T 631 (Appllcation diamlseod), is applloable to the factual aituatlon with 

vbioh ve are hore concerned. He said: 

‘The qiestion of the“ exemption of said &ope$- :” 

.’ ’ ty’ from taxation involves the iroper interpretu.tion .~ 

of’ constitutional and statutory provieioaa, the 

. inaterlal portions of vhlch, are aa followsr 

?’ ;j..‘I 

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‘; : ., %onst. a&t. 8, H-ir CM1 property in thfa 

.’ ‘, @ate, vhether o*vned by natural persons or oorpor- 

.' :.. ';..-:: .: 

..atlons, other than mo-ricl~al., shall be ta&ed ln 

:‘.:I:.:::..:,? 

proportion to its value. * * + Provided, that tvo ‘.: ... 

hundred and fifty dollars-vorth of household and ” 

Wtohen furnitwe.’ bolonr,in.p to each famllv In this ..: 

State shall be eiempt 6om-taxation, I 

‘%onst; i&t. 11, 0 9: 

tiee, olties tid tows, 

‘The grooerty of oounpublic p:wpos6s, 

omcd aad heid 2 for 

* ii * and all other property de-. 

voted exclusively to the use ad benefit of th?ipublia shaa be exempt from * Q * taxamon. ( 

“conat. art. 8,’ B 2: -&hi &islnture nay, 

funds of such l.nstitutio&‘of loaning and lands) 

and institutions of purely public chori.yy; acd 

ell laws exeqAlng progcrty fkwz taxation other 

tha?l the pro crty above mentionad shall b5 null 

and void. ’ ,.., $ Italics ours) 

~?Rc&eod Statutes 1925, art. 7150: 

'IThe followirq property shall be,exempt from 

tax%tlon, to-l&t; 4 * * 

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Ronorable George H. Sheppard, page 6 

"'All property, vbothcr real or personal, belongS.ng exoluslvely to this State, or any p oUtScal 

eubdivlsion thereof.1 (Underscoring oure} 

Artlole VIII, Section 2, of the Constitution, authorizes 

the Ieglalature to pass general lave exempting from taxation &- 

110 property used for $ubllc purposes. 

Article 7150, Revised Statutes, declares that ‘All property, whether real or personal belonging exclusively to this State 

or az7 political subdivision thereof shall be exempt from ta2Lstlon.l’ 

The pertinent parts of Article 7150, vhgn read Fn oonnection wlih the linitatlon on the authority of the Le&slature to 

exe-t from taxation ‘publlo property used for public purposes” by 

Article 8, Section 2, supra, was held valid in the case of City of 

Abllene v. State, aupra. The effect of said opinion is the same 

as if eaid pertinent parts read: 

All property, whether real or personal belong- 

%ng exclualvoly to this St&e, or any political eub- 

&ivleion thareof, used for public purposes, shall be 

exeztrpt ,frcap taxatlOn. 

There &8 oertaln oonstitutional and statutory exceptidlls 

to the above statute, as so cozzM,ruod, among others are Sections 6a 

and 16a, Jxtiole 7 and Section’ la, Article 8, of t&e Cmatltutlon 

and Sections 17, 18, Artiplo.7350, Revised Statutes, v$th alch. ve 

are nbt hsre gonoernod. 

We have found no de&s103 of the oourts of this State 

based upon a like stat6 of facts. 

In the case of Statb v.‘ City of Rouston; 140 k. U. (2d) 

277, (nit of error refused), it teas held that property purchased 

vlth c=Iler from a special fund by a city, in excess of portion rcquired for a boulevard, for purpose of obtslnlng a--better bargain, 

but. held kq oity for aals at a fair price, vas held for a “public 

PWOPE, ” ti sense that It was bought and v&s belq held to peeervo. 

the special fund, and hence vas not subject to taxation by the 

State of Texas and Harris County. The court found that the city 

purchased “,he entire tract, inoluding the part used for a boulevard 

6s veil as the excess not so used, to preserve th-eclel fund 

from wZ& the purchase prlco was paid. Vi%i?%?crcnco toFbis 

-iIn -1 
honorable George H. Sheppard, pa&e 7 

‘Xl’ the property vas bought and Is being held 

- to preserve such fund, hov can it be said that it 

uas not bou&t, and ie now being held for a publio 

pwpoee. * * * When the’ city dooa sell such pro-. 

perty, it-must necesearily apply the proceeds to 

Qoadvays to Turning Basis Funds and Bands. * ” 

The Court, titer quotSnS at great length from the case of the City 

of Sheman v. WillLams, 84 Tex. 421, 19 9. W. 606, concludes its 

opinion by saying: 

‘The.trlaL court’s ju&ment is clearly right 

r: if.the property constitutes a’part of the special 

fund; and It seems clear to us that such property 

is so; if any case, the stipulated facts support a 

Msd%ng by the trial court to that effect, aud we 

vi11 asswm the court eo found. Thls be%ng ao, it 

3.a neither taxable nor capable of being sold for 

taxes, and thus diverted. Of course, if taxes could 

be levied on it, it could be seized and sold for 

taxes . ” 

An examination of the 1st of funds held on deposit to 

the cred.Lt of Kent County by the depository bsnk at the tim it 

falled,ancl vent into Involuntary liquidation, disclosoe that of 

the total of more than $100,000 to the credit of said county only 

$239.27 vas orodited to the county’s General Fund, the balance vas 

to the creilit of nuueroua special funds, nono of vhich could be 

diverted to any other fund or puvpose, but nust be used excluslvel$ for the purpose fur vhich they vere oath created, vhethsp derived fvozn taxation, the sale of bonds, or donatlom by the Stete 

of Texas, 

We can see-no distinction Ln principles between this case 

and that of the City of Shornan v. Williams, supra, and St.ate v. 

City of Houston, eusra. In the Sheman case, the real pr*operty 

involved was taken by the city in ssttlenent made with a dcfaultins tax col.Jector who ha4 collected taxes levied to pay the interest and create a aink~n~ fund on a certain bonded obligation 

of the city, but did not account to the city for sane? The court 

held, a8 it did in the Ecustoll case, that the property when sold 

ehould be credited to the special fund. That part of the opinion 

of the court, sir consider pertinent here, reads es follows: 

‘The texes collected could not have bcon nppropriatod to satisfaction of appelloo’s claim had they, 
Honorable George H. Shoppard, page 8 

. 

been paid over by the oolleotor; and for the proteotion of the taxpayers as ~011 as creditors, it seems' 

to us that the property In oontroversy should ba 

deemed a part of the fund, the mlsapplioation of 

vtich made it necessary for the oity to acquire 

. title to it.. 

'If 8 taxpayer had failed to pay the tax on 

. account of vhloh the money vas coU.ected, thon on 

enle of his property, if no bid vaa made, It would 

have been etruolc off to the city and a deed made to 

Ita under which the city would have had the power 

to oonvey the property to a purchaser from it. Rev. 

~stst., Art. 449. The money received on such a sale 

.vo~ld go to the fund on account of vhIch the tax 

VQP: Retied, and we see no reason vhy the proceeds 

of the sale of the property ia controversy should 

not belong to the fund on account of vhLch the 

taxes never paid over by the collector vere col- 

_ leoted.” . 

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The facte.be?ore us disclose that when the depository bar& failed, 

it vaa not only Insolvent, but that the sureties on Its bond &ivon 

to the oounty to aeoure the county~s~funda and it8 available and 

permanent school funds vere ale0 Insolvent, -so that .from the liqtidation of the bank's asaots and its bondsmen only 3’1s dividend 

vas paid to the county vhlch sum vaa credited pro rato t.0 each of 

the aclcounts stand.I~ on the books of the depository to the credit 

of+tho county and Sts school Suede. The county foreclosed its 

deed of trust lien on part of the land here involved and at its 

sale by the trustee purchased the sama. The other-lands involved 

vere acquired by purchase from the depository b&c's receiver for 

a nouinal *onei.derat5.on. The lands have at all times since the%r 

purcham belo.xed to Ksnt CouUy, nubjeot to the indebtedness due 

'the State as original purchase money: The aountg has never been 

able to find a purchaser for same a! afalr an& rcaeonablo nrlce. 

These lands were aoquired by Kent County oololy for the pro%ection 

of the several funds above named; QrQ olearly a.part of each of 

said Sundaj and, as harstofore et&cd, whatever amount is received 

from ths eale of ths lande by ths county will be credited proportionately to each of said funds. Ilhile only g particular spooial 

fund was involved in the Sherman case ard the lfoueton casa, YO 

have hero esveral special funds, e~rne belonyiq to the county, 

others to school and road distr9cts, aleo a very lnslg~ific2~t 

~UIQ beloqgng to the county's &cnaral fund, all of vhich are certainly pUblFc funds. With ll0 COUrt decision directly iii PObt t0 

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Honorable Oeorge B. Sheppard, page 9 

&tide UB, ve have reached the conolualo~ that the lands are pub- 

.llo lands of Kent County and as such arc being held only for pub110 purposes, therefore am exenpt frm all taxstlou for the years 

eubsequent to the year in vhlch the county ecqulred title thereto. 

The Murdoch land was acquired by the county in Nag, 1935, thcrefore it was not subject to taxatLon for the year 1936 or upon any 

subsequent yoar while it IA 80 held and owned. Ilo are not advised 

..a8 to the date the title to the other lands here involved passed 

to the oouuty . 

, The above stated conclus,lone constitute o&v amvep to 

questldn Ho, 1. 

liowevor, the quest102 of tQxos vhlch were delinquent at 

the tSm3 of and prior to the acquisition of the land present a 

rath?r difficult ~rogofiWlon. This 1s 80 became, eo far ce lis 

have boen able to ascertain, that preclso questioia, as here preeentod, has roper baen bsfore o-q courts. 

.~ 

In the i&e bh 'khlldreas coutlty V, State, 92 S.N. (2d) 

1015, the Supreme Court in answering certified questione, epeaking through Justice sharp, Raid:. 

'2he county ia merely an am of the State. It 

ie a political subdivision theroof. In view of the 

relation of a county to the State, the Stat3 my 

use, and frequexitly does ~3, a county as its agent 

%n the dlecharga of the State'a fmotione and dut- 

* 13s." 

The co& further eald: 

%hlle thlfi proolee queotlon, PO far ti8 ve knov, 

has never been determined by "tie court, we think the 

great weight of autborlty sustains the rulo that when 

the title to this Laad rovcrted to ChLldrese County, 

the tagi liea fo? Stat3 pUl?p0038 becnne cmyed with 

the ovnerehip of land by the county. Thio property, 

dedicated to a county exClus$vdly for a public purpose, aud having been sold by the county to lndlviduals, who failed to cozq~ly wlth the contract of 

e.ale, whereupon tho titlo to the land reverted to 

the county, cannot bo burdened with taxes due the 

Stat3 duriq tho title it vae privately omed." 
Eonorable George H. Sheppard, pe43 lo 

ft 18 true that In the above ~caze the court was oonsldering oountg echo01 land, vhich under Article 7, Section 6a of 0~ 

Constitution, 1s taxable except fo? ~Stato purpoees, But ln that 

caee the land had becme private property and liable for State taxz%ea 

It then roverted back to the county with tnxos for State pLLPbelug delinquent. In BO far an euch delinquent taxes are for 

stato purposes, vo believe that the decision le applicable. 

You are, therefore, advised that the tax lien foi=.State 

taxes became merged vlth the title of Kant County and that neithsr 

the ooutg nor the land can be held for euch taxes. 

The quo&ion of dolinque~t4axos other than those for 

State pu~posos present a at111 more ool;lplexN problem. 

IIowever, at the outset, ve want to etate that the dellelan of the Supreme Court In the cm3 .or Childroes County v. state, 

eupra, does not apBly to this case insofar as taxee Sor purposes 

other than State are comorned. 

.Artio&e 11;93CtlO~ 9 Of ,thO CqSEtitUtiOU Of TOX&Qj prooldaa in part ea follovs ; %? ‘. 

“The property of oountlea.* ‘* Q owned and held 

only for public pUPpOsos * * + ahall be 3X3@ from 

force~eale~**.” . -: ‘. 

It lo th&efoi?o, agp&e& that the laid cannot be sold 

for taxes beoauso we have heretofore held that the l@d is public 

proparty held fdr publio purposee. Our holding 1s euetalned by the 

ease of State V. Stovall, 76 S. H. (2d) 206, (writ refused) vherein 

tho Court enjoined the eale of land under a tax jud&ment ln favor 

of husk Iodop3Mei-A School District., where the land had been acqulred by the State for n pub110 purpoeo bsfore the tax judgment of the 

echo01 diatrlct became final. : _. ‘~. 

However, in tho co83 of ‘Ciiy’if Dallas v. State 28 S.11. 

(26) 937; the court hold that the city nuet pay the taxes’due the 

State, county, road dletrlot and echo01 dltrtMct, vhlch were deUnquent befur tho purchase by the oltg. In that CZMO the court 

&id not discusa the merits of its holding ~ncl in ~10~ of the fact 

that ~3 are bouud by that docielon, we rhall not epoculate on the 

court’s maeone. .~ I, 

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Xonorable OOOl?&8 H. Sheppard, p8g3 u. 

. 

We, therefore, hold that Kent County la liable for 

taxee due before tho 8CqQbltlOa by tho county, OxOOpt taxee 

state purpoeoP. 

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