Honorable Joe Fultz 'CountyAttorney Grimes County Anderson, Texas
Dear Sir: OpinionNo. O-3849 Re: Is Grimes County entitled to an exemption from the payment of the State tax of eight centsper gallon on the distillate it purCha&?S?
We are in receipt of your letter of August 2, 1941, in which you request the opinion of this departmentupon the question set out therein as follows:

"GrimesCounty purchases quantitiesof distillate for use in its tractors. These tractors are used in the constructionand maintenance of county lateral roads.
"Is Grimes County entitledto an exemption from the payment of the State tax of eight cents (8{)per gallon on the Distillate it purchases?" The followingportions ofArticle XVII of House Bill 8, Acts of the Forty-seventhLegislature, 1941, are pertinent to your inquiry. "Section 1. The followingwords, terms and phrases shall, for all purposes of this Article, be defined as follows: “X * * "(c) 'Otherliquid fuels' shallmean any liquid petroleumproducts, or substitutetherefor, having a flash point above one hundred and twelve (112) degrees Fahrenheit, according to the United States official closed testing cup method of the United States Bureau of Mines, includingdiesel fuel, kerosene, distillate,Honorable Joe FultZ,-Page 2 (C-%49)

condensate,or similarproducts that may be used as fuel to generatepower for the propulsion ofmotor vehicles upon the highways of this State.

w * * * "(i) 'Person'shallmean and include every individual, firm, association, joint stock company, syndicate, copartnerehip, corporation (public,private, or municipal),trustee, agency, or receiver.

"Section 14. (a) From and after the effective date of this Article, there shallbe and is hereby levied and imposed an excise tax of four (4) centsper gallon, or fractionalpart thereof, on all users of liquefied gases, and eight (8) centsper gallon, or fractionalpart thereof, on all users of other liquid fuels, upon the use of such liquefied gases and other liquid fuels by any person within this State onlywhen such liquefied gases and other liquid fuels are used in an internal combustion engine for the generation of power to propel motor vehicles upon the public highways of this State. The said tax shallbe computed and paid to the State of Texas through the Comptroller at the time and in the manner hereinafterprovided." (Underliningours) Prior to the enactment of House Bill 8, supra,the Motor Fuel Tax Law was codified intoVernon's as Article 7065a-1, and containedthe following definition:

"(e) 'Person'shall mean and include every individual, firm, association, joint stock company, syndicate, co-partnership, corporation,trustee, agency or receiver." The above quotedportfon of the Motor Fuel Act was construedby the Supreme Court of Texas in the case of State Y. City of El Paso, 143 S.W. (2d) 366, in an opinionwritten by Justice Critz. In that case the court discussed the question of whether or not the Constitution of Texas prohibits the assessment of a use tax on motor fuel against a municipal corporation,and stated as follows:

"A careful examination of our Constitutiondiscloses that the only inhibitions,restrains,or exemptions contained thereinwith reference to munici,pal corporationsare found in Section 1 of Article VIII and Section p ofArticle XI, Vernon's Annotated St. Const.Honorable Joe Fultz, Page 3 (0-3849)

"So far as pertinent here, Section 1 of Article VIII of our Constitutionprovides: 'Section1. * * * All property in this State,whether ownedby natural persons or corporation,other than municipal, shall be taxed in proportion to its value. * * * Itmay also impose occupationtaxes, both upon natural persons and upon corporations,other than municipal * * x, It may also tax incomes of both natural persons and corporationsother than municipal, * * *..I "Section 9 of Article XI of our Constitution reads as follows: 'Sec.

### y. The property of counties, cities and towns, owned and held only for public purposes, such as public buildings and the sites therefor. Fire engines and the furniturethereof, and all property used, or intended for extinguishing fires,public grounds and all otherproperty devoted exclusivelyto the use and benefit of the public shall be exempt from forced sale and from taxation,provided, nothing herein shallprevent the enforcementof the vendors lien, the mechanics or builders lien, or other liens now existing.'
"An examination of the above-quoted constitutional provisions disclosesthat they operate to exempt municipal corporations from only three classes of taxes. These are ad valorem taxes, occupationtaxes, and income taxes. It is too plain to admit of debate that the taxes here sought to be recoveredby the State are not ad valorem or incometaxes. We are therefore left to determine only the question as to whether or not they are occupationtaxes. Of course, if they are occupati,on taxes, the City is exempt under Section 1 ofArticle VIII of our Constitution, supra. "* * * It follows that the tax here sued for is manifestly a tax on using motor fuel in the operation of Eotor vehicles on the public highways of this State. Such tax is an indirect or excise tax. This being true, the constitutionalexemption of municipal corporati~ons fron. occupationtaxes cannot apply."
In requiringthe City of El Paso to pay the use tax on the motor fuel it used, the court stated as follows:

11 + *.* We think the statutorydefinition of 'Person,1as contained in subdivision (e) ofArticle 7065a-1, covers all corporationsor agencieswhich actually sell motor fuel in Texas. This being true, the statutealsoHonorable Joe Fultz, Page 4 (O-3849)

covers all corporationsor agencieswhich use motor fue,l when there is absent an actual sale in this State." (Untierlining

ours) Apparently In linewith the Supreme Court's construction the Legislaturedefined the term "Person" in paragraph (I), Section 1 of Article XVII, supra, to includepublic, private or municipal corporations.

The Constitutionof Texas seems to recognize that a county is a municipal corporation. Section 3 of Article XI provides as follows:
"No county, city or other municipal corporation shall hereafterbecome a subscriberto the capital of any private corporationor association,or make any appropriationor donation to the same, or in anywise loan its credit; * * *" (Underliningours) Article 1572 of the Revised Civil Statutes provides as follows: "Each countywhich now exists or which may be hereafter established, shallbe a body corporateand politic." The courts of many states have passed on the question of whether or not a county is a municipal corporation. Some cases hold a county to be a municipal corporation,others hold it to be a public corporation,and still others hold it to be a quasi public corporation.

The decisions of the courts of this State are not clear on this point but we believe that the weight of authori,ty is that construilgthe above quoted Consti,tutional provision and statute, a county is either a public or municipal corporation.

The Supreme Court of Texas in the case of Bexar County vs. Lindsn, 220 S.W. 761, in referring to Secti.on51 of Arti,cle III of the Constitution of Texas stated as follows:

"The giving away of public money, its application to other than strictlygovernmentalpurposes, is what the provision is intended ,tomar-d against. The prohibition is a positive and absolute one except as to a distinctive class to whom the State is under a sacred obligation. Not only are individuals,associations of individualsand private corporationswithin its spirit,but all kinds of public or political corporations, as well, whether strictlymunicipal or not.Honorable Joe Fultz, Page 

### 5 (O-3849)

It therefore applies to counties,whether considered as public corporationsor only quasi corporations. The Similar restraints upon the use of public funds and the public credit applied to countiesby these otherprovisions of the Constitutionpractically demonstratethis to be true." The San Antonio Court of CivilAppeals in the case of Brite V. Atascosa County, 247 S. W. 

### 878 in an opinionwritten by Chief Justice Fly stated as follows:

I,

. . .The statute (Article

### 1365)expresslymakes each countya body corporateand politic, and as such it undoubtedly had the power and authority to institute suits and defend against those brought against it. The Constitution ofTexas recognizes countiesas municipal corporationsalong with cities and towns. . . .II The Eastlsnd Court of Civil Appeals in the case of City of Abilene V. State, 113 S. W. (2d) 

### 631,stated as follows:

"Counties, cities, and towns are municipal corporations. Const.Art. 11. They are political subdivisions of the state. Id. Corporation of San Felipe de Austin Y. State ofTexas. 111Tex. 

### 108,229S.W. 

### 845. * * *'I
It is the opinion of this departmentthat the definition of the term "Person" in House Bill 

### 8, supra, includesa county so as to require a county that uses distillate in one of itsmotor vehicles to pay the tax imposedby Article XVII, Section 14(a) of said Rouse Bill 

### 8.
APPROVEDAUG 

### 14,1941 /s/ Robert E. Kepke
ACTING ATTORNEY GENERAL OF TEXAS Yours very truly ATTORNEY GENERAL OF TEXAS

APPROVED OPINION COMMITTEE By /s/ Billy Goldberg Billy Goldberg Assistant BG:eaw:lm BY /s/ G.W.S. CHAlRMAN