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 iC3ntCounty, rslatin

Oote Ad valorenl And 22 In Blook Hudsp,ethCounty,
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 01iiadebtpclmos 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 ~KentCounty.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. ::.’ ~. .” : . .,. : :. . ‘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’, Murdochvasr8citti a oonsideration of Ten Dollarn. :,

insolvent and by reason ‘of this judgmnt KentCounty held far raore than.fifty per cent OSthe 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, Murdochthat 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 samein 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 amountfrom 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 CommmdSchoolDistrict Schoolhouse :.

...Common

School District Rural &I Common School District Building ::. County AvaIlable School County Permanent School County Administration Court &US8 Bond Sail Bond .’ Road andBridge Dond

.‘.: ?SwialRoad District No, 1 Bond Special Road Distrtct 110.2 Dond Special Road District ho. 7 Bond Gonaral Bund;Herrant Sinking CountyPUghway

Warrant Sinking ‘. Road &Bridge Warrant Sinking : General Fund Jury Fund’ .’ Rood & &,&Q8 Fr;nd

. PermanentImprovement Fund OountyRighway Fund._ “There has been reimbursed to ’ each of the ‘above funds; from eOll8CtiOnS madefrom 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, eomeof 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 namedfunds 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%ythen on deposit with the depository 3.3.%hounabove. ”. .-* Honprable George H. Sheppard, page 4

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‘Kent Countjrovns 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 myletter to you of thls date and here-~ ‘1. ’

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..vith attached.

. The county acquired title to theao

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

.‘..~.Ivhlch they ecqulred, title to the land described in ..:~ _;:. . ~~~.Y”’ the 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 Currencyappointed 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 ,oSthe rem- as- .: sets to Kent County, it having been the highest _jl;.”j:;;
., _.,.. _.. .;I :_..

-‘.: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 sameaa’ 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+ oweare not advised vhether ’ Kent,~ County hasa since It acquired title to the land, legally and annually rendered the came for taxation; This fact mayor maynot become Important In detorminlng the questions to be hereinafter considered; Those questions maybe 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. (26T 

### 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 .,~.. ‘; : ., 

### %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 poUtScal 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,frcaptaxatlOn. There &8 oertaln oonstitutional and statutory exceptidlls to the above statute, as so cozzM,ruod, amongothers 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.

Wehave 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 teasheld 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 -1honorable 

### GeorgeH. 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 nowbeing 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%ngao, it 3.aneither 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 fvozntaxation, the sale of bonds, or donatlom by the Stete of Texas, Wecan see-no distinction Lnprinciples 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 madewith a dcfaultins tax col.Jector whoha4 collected taxes levied to pay the interest and create a aink~n~ fund on a certain bonded obligation 

### ofthe city, but did not account to the city for sane? The court held, a8 it did in the Ecustoll case, that the property whensold 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 deemeda part of the fund, the mlsapplioation of vtich madeit necessary for the oity to acquire

. title to it.. 'If 8 taxpayer had failed to pay the tax on

. account of vhloh the moneyvas 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 madeto Ita under which the city would have had the power to oonvey the property to a purchaser from it. Rev. ~stst., Art. 449. The moneyreceived 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.” . : The facte.be?ore us disclose that whenthe 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 sumvaa 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 samea! afalr an&rcaeonablo nrlce. These lands were aoquired by Kent County oololy for the pro%ection of the several funds above named; QrQolearly a.part of each of said Sundaj and, as harstofore et&cd, whatever amountis 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 Shermancase ard the lfoueton casa, YO have hero esveral special funds, e~rnebelonyiq 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 COUrtdecision directly iii PObt t0

.~ ,a :

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 Murdochland 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&vamvep to questldn Ho, 1.

liowevor, the quest102 of tQxos vhlch were delinquent at the tSm3of 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 SupremeCourt 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 %nthe dlecharga of the State'a fmotione and dut- * 13s." The co& further eald:

%hlle thlfi proolee queotlon, POfar ti8ve 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, audhaving been sold by the county to lndlviduals, whofailed 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 ~cazethe court was oonsldering oountg echo01 land, vhich under Article 7, Section 6a of 0~ Constitution, 1s taxable except fo? ~Statopurpoees, 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 BOfar 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 dellelanof the SupremeCourt 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 ,thOCqSEtitUtiOU Of TOX&Qj prooldaa in part ea follovs ; %?‘.

“The property of oountlea.* ‘* Qownedand 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. Ourholding 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&mentln 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 &idnot discusa the merits of its holding ~nclin ~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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iXonorable OOOl?&8H. 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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