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# TheAttorney GeneralofTexas

December 31, 1982

MARK WHITE Attorney General

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AnEqualOpportunity/ AffirmativeActionEmployer Honorable MarkM.Humble MilamCounty Attorney County Courthouse Cameron, Texas 76520 Opinion No.?lW-583

Re: Constitutionality of tax exemption for nursery products in section 11.16 of the Property TaxCode

DearMr. Humble:

Youaskwhether the advalorem tax exemption for nursery products set forth in section 11.16 of the Property TaxCodeis constitutional. Weconclude that it is.

Section 11.16 of the Property TaxCodeprovides the following in pertinent part:

(a) A producer is entitled to an exemption from taxation of the farm Droducts that he produces andowns. Anursery pioduct. as defined by Section 71.041, Agriculture Code, is a farm product for purposes of this section if it is in a growing state. (Emphasis added).

Section 71.041 of the Agriculture Code contains the following definition: 'Nursery product' includes a tree, shrub, vine,

cutting, graft, scion, grass, bulb, orbudthat is grown for, kept for, or is capable of, propagation anddistribution for sale. (Emphasis added).

Section 11.16 wasadopted in conformity with article VIII, section 19 of the Texas Constitution which provides:

Farmproducts... in the hands of the producer, and family supplies for homeand farm use, are exempt from all taxation until otherwise directed by a two-thirds vote of all the members elect to both houses of theLegislature.

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Honorable MarkM.Humble- Page 2 (Mw-583)

The legislature maynot authorize that which the constitution prohibits, Maher V. Lasater, 354 S.W.Zd 923 (Tex. 1962). Specifically, the legis: pioperties - lature is without power to add to the list of

entitled -to exemption under the constitution, Leander Independent School District V. Cedar Park Water Supply Corporation, 479 S.W.Zd 908 (Tex. 1972); City of Amarillo V. Amarillo Lodge No. 731, A.F. andA.M., 488 S.W.Zd 69 (Tex. 1972), andany attempt to do
sois void. City of Amarillo V. Love, 356S.W.Zd 325 (Tex. Civ. App.

- Amarillo 1962, writ ref ’d n.r.e.); Dickison V. Woodmenof the World Life Insurance Society, 280S.W.Zd 315 (Tex. Civ. App. - SanAntonio 1955. writ ref

’d). In this instance, the issue is whether “nursery prod&ts,” as defined by section 71.041, Agriculture Code, constitute

“farm products” within the meaning of article VIII, section 19of the Texas Constitution. If they do, the statute is constitutional. If they do not, the statute attempts to add to the list of properties entitled to exemption under the constitution and is void. While the authority is not clear and unambiguous, we conclude that the courts would be likely to hold that “nursery products” are “farm products” andthat the statute is constitutional.

It has been suggested that Kirby Lumber Corporation v. Hardin Independent School District, 351 S.W.Zd 310 (Tex. Civ. App. - Waco 1961. writ ref

’d n.r.e.) is controllina. Wedisagree. The court therein declared that timber grown on--II tree farms” does not fall within the ambit of article VIII, section 19. Relying on the principles that constitutional provisions must be construed in the light of conditions existing at the time of adoption andthat it does not lie within the power of the legislature to change their meaning or enact laws in conflict therewith, Jones V. Ross, 173S.W.Zd 1022 (Tex. 1943); Travelers’ Insurance Companyv. Marshall, 76S.W.Zd 1007 (Tex. 1934), the court declared:

Inour opinion appellant’s timber here involved is not included in the constitutional exemption of

‘farm products.’ We feel certain it was not within the contemplation of the framers of the provisions andthe people whoadopted it. In 1879 Texas wasin the throes of aneconomic depression, and apparen;t;tintended the exemption to be temporary otherwise directed by a two-thirds vote’ of the Legislature. See Interpretive Commentary, Vernon’s Ann. Tex. Const., 570. Texas citizens of that day, not far removed from frontier and pioneer status, considered timber and forests as areas to be cleared before the pursuits of husbandry could be engaged in. It would have been incredible, then, to call trees ‘farm products.’ Wethink they are . .

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not such now, within the meaning of the Constitution.

351 S.W.Zd at 312.

At most, the Kirby case stands for the proposition that, regardless of whether "the application of scientific forestry practices to anestablished stand of timber," i.e. alumber operation commonly referred to as "tree farming," would properly be considered "farm products" now, it clearly was not so considered in 1879. But the case offers usnoguidance in determining whether section 11.16 is constitutional, because a lumber operation as contemplated byKirby does not meet the threshold requirement of section 11.16 of the Property TaxCode. Atree aspart of alumber operation is not "grown for, kept for, or is capable of, propagation and distribution for sale." Aericulture Code 571.041. Anursery is defined as "a nlace where trees, shrubs, vines, etc., are propagated for transplanting or asuse for stalks for grafting." Hill V. Georgia Casualty Company, 45 S.W.Zd 566, 567 (Tex. 1932). (Emphasis added). Timber, onthe other hand, denotes "trees of a size suitable for manufacture into lumber for use of building andallied purposes anddoes not include saplings, brush, fruit trees or trees suitable only for firewood or decoration." M&I Timber CompanyV. Hope Silver-Lead Mines, Inc., 428 P.2d 955, 955 (Idaho 1967).

Theword 'timber' hasbeen generally defined as meaning growing trees suitable to beused for the construction of building, tools, utensils, furniture, fences, ships, etc. This concept of timber distinguishes it from saplings, and undergrowth, fruit trees, andtrees suitable only for firewood or cordwood, or for decoration.

Melder V. Phillips Pipe Line Company, 539 S.W.Zd 208, 210 (Tex. Civ. APP. - Austin 1976, writ ref'd n.r.e.). See also Cummer-Graham CompanyV. Maddox, 285 S.W.Zd 932 (Tex. 1956). Because the court in Kirby wasnot concerned with nurseries, it offers uslittle guidance.

Amore helpful case is City of Amarillo V. Love, a. There the court held that ataxpayer whoengaged in ageneral retail (and
somewholesale) nursery business for profit was not entitled to claim
an ad valor-em tax exemption under article VIII, section 19. The taxpayer received his nursery stock from large nursery plantations or farms and replanted the stock in order to preserve and continue the life of the plants. Prior to the time that the nursery stock was removed from the plantations or farms, they were in their "first growth stage." During the time in which the stock was in the possession of the taxpayer, they were in their "second growth stage." The court held that the taxpayer was not entitled to advalorem tax

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exemption because he was not a "producer" within the meaning of article VIII, section 19.

In our opinion the nursery stock in question does not come under the constitutional exemption of 'farm products in the hands of the producer.' In order to comeunder the exemption, appellee's nursery stock must meet tworequirements: first, it must be 'farm products' and if so, it must be found that appellee is the 'producer.' Under the facts andcircumstances before us, wedonot think the nursery stock meets these requirements.... Thetrees andbushes were started by grafting and budding on large nursery farms andtransferred to appellee who conducted its retail and wholesale business on several city lots within the City of

ordinarily used amongboth business men and the general public. Appellee's care and treatment of this nursery stock during its 'second growth stage' was incidental to its selling the stock to the ultimate consumer. It would be a strained construction of the applicable constitutional language to say the nursery stock in the hands of appellee is 'farm products.' (Emphasis added).

356S.W.Zd at 328. Thecourt held that aperson tending nursery stock during its "second growth stage" is not a "producer" within the meaning of article VIII, section 19. It did not directly address the issue as to whether nursery stock in its "first growth stage" is a "farm product." However, webelieve that our courts, if confronted squarely with the issue, would soconclude.

Wefind it persuasive that Texas courts in other contexts have concluded that nursery products do constitute farm or agricultural products. InBrewer V. Central Greenhouse Corporation, 352S.W.Zd 101 (Tex. 1961), the Texas Supreme Court held that workers in greenhouses
were "agricultural laborers" within the meaning of the Fair Labor Standards Act, 29 U.S.C. section 201 et seq. The act defined "agriculture" to mean "farming in all its branches and among other things includes... the production... of any agricultural or horticultural commodities.... 29 U.S.C. 9203(f). Admittedly, the definition of "agriculture" in the federal act is broad. Yet, in an advalorem taxation case, the Ohio SupremeCourt relied in part onthe
case in construing a statute which exempted equipment and machinery

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"used inagriculture" and"agricultural products onfarms." InBenken
v. Porterfield, 247N.E.Zd 749, 753 (Ohio 1969), the court declared:

[Tlh= business of planting, cultivating, harvesting, and selling flowers and vegetables, indoors in greenhouses, or outdoors in lath houses
or planting beds in the ground, with substances being added to the soil to aid and protect the growing process, is agriculture. Again, in another context, Texas courts have held that, for purposes of workers' compensation, nursery laborers are "farm laborers" within the meaning of the statute. In Hill v. Georgia Casualty Company, B. the court stated: "That one engaged in the nursery business is engaged in anagricultural pursuit is not to be doubted." InGuerrero v. United States Fidelity andGuaranty Company, 98 S.W.Zd 796 (Tex. 1936), the court affirmed the proposition that horticulture constitutes one of the maindivisions of agriculture. It further noted the distinction discussed in City of Amarillo v. Love, E, between raising nursery stock and buying nursery stock for resale andplacing it in the ground temporarily for preservation. The former horticultural practice is a part of agriculture within the meaning of the statute; the latter is not.
While admittedly both of those cases construed a worker's compensation statute, wethink that it is significant that the supreme court of another jurisdiction relied on Hill v. Georgia Casualty Company, B. in deciding anadvalorem taxation case. In Boehmv. Burleigh County, 130N.W.Zd 170 (N. D. 1964), the court declared that
anursery engaged in growing trees, shrubs, flowers and plants fell within the ambit of an ad valorem tax exemption of "all farm structures, andimprovements located onagricultural lands." Thecourt found that the products of anursery are agricultural products because "'agriculture' is sufficiently broad to include 'horticulture."' Id. at 176. Seealso State v. Wertheimer BagCompany, 43So.Zd 824 (Ala. 1949) (a sales tax case which relies in part onboth Hill v. Georgia Casualty Company, supra, and Guerrero v. United States Fidelity and Guaranty Company, a); Orendorf v. H.Weber and Sons Company, 140 A.2d 641 (Md. 1958); Township of Marple v. Lynam. 30A.2d 208 (Pa. Super. Ct. 1943); Hagenburger v. City of Los Angeles, 124 P.2d 345 (Cal. Dist. Ct. App. 1942); Dyev. McIntyre Floral Company, 144S.W.Zd 752 (Ten*. 1940).

Weare persuaded that Texas courts would construe "farm products" in article VIII, section 19 of the Texas Constitution to include nursery products as defined in section 71.041 of the Agriculture Code andbelieve that section 11.16 of the Property Tax Code is constitutional.

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SUMMARY

Section 11.16 of the Property Tax Code which exempts from ad valorem taxation farm products, including nursery products as defined by section 71.041 of the Agriculture Code, is constitutional.

MARK WHITE Attorney General of Texas

JOHNW.FAINTER,JR. First Assistant Attorney General

RICHARDE. GRAYIII Executive Assistant Attorney General Prepared byJimMoellinger Assistant Attorney General

APPROVED: OPINIONCOMMITTEE

SusanL. Garrison, Chairman JonBible Rick Gilpin Patricia Hinojosa BobLattimore JimMoellinger

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