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# TXZEA-ETORNEYGENEWL OWTEXAS AUSTIN. TEXAS PRICE DANIICL *-- o-mn. Decembef 16, 1948

Hon. Geo. H. Sheppard opinion No. VA739 Comptrollar of Public Accounts Aus~tfn,Tcrae R”,;.The ,,nec@xiily for purface 

### owacrs ef State classifi’ed mineral lands to pay’stata ad valorem tanemon the value bf,th~ sp*fac* plus Dear Sir: the minerals.

You request 

### our opinion as to whether surface owners of State mineral claraified lands must pay a State ad valorem tax on the value of the surface plush the minerala or on the surface value only. Par the purpose of,this. opinionyour question nil! be considered as to the liability of aa surface 

### owner~forthe payment of the State ad valorem tax (a) :prior to the lease of the mineral interest, and (b) at the ,time of and subsequent to the lease of said interest. Tae Supreme C,ourt of Texas in the case of Sh&+d~v. Hogg, 124.T.e~. 29.0.77 S.W.(td) ~1021. has stated the’~rule of law as follows:

:‘!Wo-will ‘add’s **few** words as toths royalty interest involved under the lease **of the**  unpatented school land survey, which:is, as staidin plaintiffs in error’s arpmint, ‘executed by the lessor in-

‘dividually and as agent for the State of Texas.’ “After upholding the validity of the Relinquishment Act in Greene v. ~Robison, 117Tax. 533, 8 S.W. (td) 655, the Supreme Court, in an adopted opinion by Judg,eSharp, for the fir’st time definftely determined the nature of the interests of the agent lessor and of his assigns in words concise, clear, and unambiguous, viz.:

‘In the case of Greene v. Robison, 117 Tex. 533, 8 SiW! (2d) 655, it was held that, by the terms of the Relinquishment Act it is meant that the oil and ‘gas in place shall not vest **in** the owner of the soil as his property, but that it means that 15/16of the. -
H,on.Geo. H. Sheppard, Page 2 (V-739)

1,”

,~. minerals and f of any and all amounts received above 10cents **per** acre 

### per annum as rental shall be allowed the owner of the land for his services as agent 0Xthe state in making the mineral leases. In-our opinion, the act, when sairly and reasonably. construed, aleo means that ail minerals not disposed of 80 with the title of the land, subject to the provisions of the act., That .yben a’.valld and binding lease or conveyance of the minerals,,is .made .by*the. owqer of~t&$,*qLd; a+he agent of the state, then in that,,eye?ghe receives the foregoing amount&.ks cqmpensation for ,,hisservfces. aisls~Lr.e.,~,She,,rentals, royalties. and bonuseq 4er&r& from- the leases ex4cuted by him b,econyyprop~erty rights during the period of time Ior whi&h the lease runs:.Prior to the.making of .+E .x+wW lea.se:,. the. ovmor:,:‘,of

~tlie. .lan$&as .no rig&i4ko assi@ QP coxvmy.*qy :kpiger+,l;&hts in thqwqmrty. ;It.is .tbs int4ntJon.of~Ur+,laa th;at the owner of the land shall be the agent of the state to,execute mineral leases. :.Whepev?r a minbral.lease ox&M& .by,a. p+r.Joq owryr;.tsr: - ~minst,&s~.ihe,~then ow# of:the land.bec~oxnes ” -thea&t, sf. *e state with ,authqri* to:sell or .le4se the eil and gas mfneral rights, as pro? vided for in tbc Relinquiahmeqt Act.

“‘The rulq is wall established that it is :noktite.-policy #f the lawsof thie st&to favor rastraiatsapon alioaation”of prqqrtqy. The cuurtwofthis~state frave @abiishi+d tbexe that ente ur royalties payatiI8uim4rtM~anZ

. . gas rfineral ~lea,sesare severa~bl4.an$tS4pard; he tram :~a qwnerynip ,oxme surzaci, ds.tate ,+qd are prop.4xty rights, and, having astablishod tpss ,-lo wftlr r4,s;pectto.su,chproperty, we think, un: S*r the policy.0: the,law of this state, that they 

### arp a$srgnahl,e by the owner t@erepf,‘;, LWX+r v. 

# .%,a(24 !69,

4 ,*;* * ~‘! “keading the Constitution and &ah&es to.-, ,’ ~. gather, there is no escape from the coxiclusion ‘~~~ that ,tbc intcrpsts, he-r.4involved Fro meant to be taxed 46~

real.:4statc.!~~~,Clasrify them ‘8,:**you** may, they prq at Ipast rights or pr~v@gea.belonging~. -.. -
Hon. Geo. H, Sheppard, Page 3 (V-739)

or in some wise appertaining to real property, and the Legislature has provided that they be taxed as such. Bracken v. Van Zandt County (Tex.Civ.App.) 74 S.W.(2d) 540.” On motion for rehaariag (124 Tex. 290, 80 S.W.(2d) 74l)i the Supreme Court held that the surfac’e ,owner’s royalty interest acquired by biro as agent for the State was taxable 4s an interest in land, irraspective 4s to whether, or not the mineral classified land was patented or unpatented.

Prior to the execution of the mineral lease, all of the mineral interest in the mineral classified land is the prope,rty of the State of Texas, and the surface owner has **no** title to the minerals whatsoever&~,Hence, he is not.required to r,ender such~mineral interest for taxation or to pay an ad valorem tax thereon.

However, upon the execution, of a mineral lease by the sur? face owner 6s agent for ~the State of Tex4s, he is required to make rendition of and pay an ad valorem tax’upon the value of the royalty

. interest acquired by him as agent by the’exccutloa of the lease, as well as the surface value, during the lffe, of the lease. ,. SUMMARY Prior to,the rxecution of a mineral lease by,tbe

‘surface owner of State mineral classified land& the. surface owner is liable for the payment of State ad valoremtaxas. 

### upem tke surfaoe va,lue only. After a 7@~1~&~tsrrr~*s ~+en~~~ecnrerl :by .the-mdaci own- ,.er 4s 

### agent for the State of Texas, he is requir.Ld to

-~~~‘C)acqu~r.e~ 0 : :~, pay a State ad valOr4m tax uponthc royalty interest

y **him** by reasodof the,execution of such I lease; in addition to the surface valuc.~ Sheffield v. 1.Hogg, 124Tex. 290, 77 S;W.(td) 1021,80 S.W.(td) 741. Yours very truly ATTGRNEYGENERALOFTEXAS

**C. K.**  **Richards** Assistant CKR/JCP