AUSTEN in. ll%xAES 

December 3.0, 1952 

Hon. Murray L. .Harrfs 

County Attorney- 

“wood county 

Quitman, Texas 

Opinfon No. V-1568 

Re: Tax.exemption status of a 

royalty interest belonging to 

United Christian Missionary 

Society, arising from the leas- 

-Dear Mr. Harris: 

ing of lands of Jarvis Christian 

College. 

You pre~sent for the opinion of this office the question 

contained in your letter of December 2, 1952 which is copied below 

for a statement of the’ facts upon whfch our opfnfon will be based, 

with such additional facts.as we may add disclosed from the file 

and our investiga.tfon of the records of the Secretary of State. 

.Your letter follows: 

.*Jarvis College received its name from Major 

and Mrs. J. J. Jarvis of Ft. Worth, Texas, who, in 

1911, made a gift of 456 acres of land in Wood County, 

.Texas. about one hundred miles east of Dallas, Texas. 

The Grant was made to the Christian Women’s Board 

of Missions whose work is now incorporated fn the 

continufng program of the United Christian Missionary 

Society ‘on condftion that said corporation keep up and 

maintain a school for the elevation and education of the. 

Negro race on the land, or elsewhere in eastern Texas, 

in which school there shall be efficient and religious 

training.’ 

%n January 13, 1912. school began at Jarvfs with 

thirteen elementary students. The surroundings were 

primitive, but the program went forward with courage 

and determination. Gradually. the transition was made 

from elementary to secondary level, then to junior 

college and, finally, to senior college work, with recognftion by the Texas Department of Education in September, 1951. Enrollment in the Fall of 1948 was two hundred 

twenty-two pupils, using twenty-one buildings. The estimated valuation of the buildings and ground improvements, 

as of January, 1952, is approximately $534,000.00. and 

the equipment estimated value, $90,000.00. 
Hon. Murray L. Harris, page 2 (V- 1568) 

i 

‘The acreage, in the orfgfnal Grant having been 

considered inadequate. so, in 1913 and 1924 the Christian Women’s Board of Missions purchased adjoining 

land, making a total of 8744 acres available for the 

campus and farm. 

*Jarvis Christian College is fully approved by 

the Southern Association of Colleges and. Secondary 

schools. 

‘Said school is owned and operated through a 

Board of Trustees by the United Christian Missionary 

Society, which is the organizatfon which handles miiisionary .and benevolent work for the Christian Church, 

or Deciples of Christ, from whom they receive a yearly 

contribution. which is used )n the education and maintenance of said school, and, in addition thereto, money 

is ~received from the sale of oil and/or gas from royalties 

on oil produced from said properties. 

‘This institution (Jarvis College) iq-a non-profit 

educational institution, supported by the United Christian 

Misstonary Society for the benefit of such members of 

‘the Negro rac~e as wish to avail themselves of the edurational facilities offered at. this Institution. 

“For many years prior to the discovery of oil upon 

said lands in 1940, all of t&s lands herein involved have 

been dedicated and actually used for educational purposes; 

some of the lands ,b.efng used as campus; othsr lands being used as demonstration tracts in agricu&ral pursuits, 

and other lands used in reforestation courses conducted 

by the School for students enrolled therein, and a major 

portion of it used for buildings and campus. 

“All of ‘the land is under an Oil and Gas Lease and 

some of it is producing oil and gas. and the revenue 

therefrom is being used for said work hereinabove enumerated. 

‘%t the year 1940 the Women’s Christian Missionary 

,Society executed oil and gas leases on the lands involved, 

.reservfng.the usual and customary one-eighth royalty 

interesf, and~various leasehold operators are claiming 

under such leases and are now producfng oil and gas from 

parts of these lands, and are paying to the United Christian 

Missionary Society the proceeds from the sale of such oil 
. 

Hon. Murray L. Harrfs, page 3 ,(V-1568) 

and gas accrafng’ to the one-eighth royalty interest 

reserved in the leases. 

%A11 ftinds..redeived by the Women’s Christian 

Missionary Society as royalties are expended for 

educational purposes in maintaining the College and 

carrying out its co-educational program. 

“In view of the above, are these royalties subject to the payment of ad valorem tax, or, are they 

exempts from such ‘taxation under Article 7150. Re- 

‘vised Civil Statute; 19253 * 

The records of-the Secretary of State disclose that Jarsvis Chrfstian College, Hawkins,.Texas, was incorporated February 

11, 1939 with the followjng purpose clause: 

.*The purpose for’which this corporation is 

created is to support and :maintain an esllcational 

institution that will give to the colored youth .of 

Texas practical domestic, manual and agricultural. 

training, as w.ell a’s high grade instruction in the 

arts and sciences; the support and maintenance to i 

be under the general control of the Home Depart- 

.ment, United Christian Mjssionary Society, Deciples 

of Christ.” 

-The charter provides for.directors and trustees not to 

exceed in number twenty-five. There is no questfon as to the exemption from ad valorem taxes of the buildings and the campus 

upon which they are located, consisting of 874i acres, of which 

456 acres were donated or given fn 1911 to the college by Major 

and Mrs. J. J. Jarvis. This was inadequate for the purpose and 

plans for the college and adjoining additional land was purchased 

by the Christian Women’s Board of Missions of the Deciples of 

Christ which has the ,duty under its charter powers to support, 

maintain and control the college in cooperation wfth the local Board 

of Directors and Trustees. The corporation has no capital stock. 

The questfon presented is the status of the one-eighth 

royalty received by the college from leases made upon the land 

constitutfng the campus for ad valorem state and county taxes: that 

is, whether taxable or exempt. 

Certain types of property are exempt from tsxatlon by 

the exoressed terms of the Constitution, and this the Legislature 

has no power to tax. LowerColorado River Authority v; Chemical 

Bank and Trust Company, 144 Tex. 326, 190 S .’ W .2 d 48 . 0th er kinds 
Hon. Murray L. Harris, page 4 (V-1568) 

of property, and the property here in question is of that character, may be exempt from taxation by the Legislature only by the 

authority conferred upon it under the Constitution of this State. 

This power is derived from Section 2 of ‘Article VIII of the 

Constitution which reads in part as follows: 

* 

. . . the legislature may; by general laws, 

exempt from taxation . . . all buildings used exclusively and owned by persons or associations 

of persons for school purposes and the .necessary 

furniture of all schools and property us.ed exelusively and reasonably necessary in c~onducting 

any association engaged in promoting the religious, 

ed.ucational and physical development of boys, girls, 

young men or young women operating under a State 

or National organization of lilce character; . . .” 

Pursuantto the authority thus conferred upon the Legislature by Section.2 of Article VIII of. the Constitution quoted above, 

the Legislature enacted Article 7150, V;C.S.i in language in part 

as follows: 

> 

!‘A11 .public colleges, public academies, and 

all endowment funds of institutions of: learning 

and religion not used with a view to profit, and 

when the same are invested in bonds or mortgages, 

and all such buildings .used exclusively and owned 

.by. persons .or.,associations of .persons for school 

purposes; . l ,:. 

If the ones-eighth oil royalty interest here in question is 

exempt from ad valorem taxes, it must be by virtueof the terms of 

Article 7150, V.C.S., quoted above. The exemptionfrom~taxation 

of the buildings and campus grounds co~istiing of.the entire acreage 

owned-and inalntained by the colleges is not questioned, but does the 

same r~ule apply to the one-eighth oil royalty ,,intere.st ,here in question owned by then college or by ~the Women’s’. Christian Missionary 

Society of the Deciples of Christ, a religiout; organization? We 

thi!nhit makes no difference whether owe consider the corporation 

& owner’ of the property or the Missionary Society. In either 

event, it is owned by persons or an association of, persona and to 

that extent clearly falls within the ~purview of, Article 7.150, V~C.S.. 

but our difficulty arises in determinkg whether or not the oneeighth oil royal% interest here involved ‘%s mused exclusively for 

school purposes. . A careful search of the opfnions of this Department and the decisions of our ‘Appellate Courts fail, to reveal that 

this identical ques,tion has heretofore been passed upon by @is 

Department or the Courts of this State. In the recent case of Harris 
Hon. Murray L. Harris, page 5 (V-1568) 

v. City of Fort Worth; 142 Tex. 600,~18O’S.W.2d~l31, Justice 

Sharp of the Supr eme ~Court, in approving what Mr; Justice 

Robertson said-in the early case of Cassiano v. Ursdie : 

Academy, 64 Tex. 673. said: 

% has’been the policy of the state since~ 1849 

to encourage educational enterprises by exempt-~ 

ing them froth any shaie of the burdens of government. Pasrh. Dig., arts. 5147. 5148, 7485, 7688. 

. . . 

“The education of the masses is now recogniied as a function of ,state government. Those who, 

fr~om charitable considerations, to forward sectarian 

views, or for private profit, have organised or con- . 

ducted schools, have assisted the state in the performance of a duty it owes to its citizens which cannot be too thoroughly performed, and which thestate 

has never assumed that it had either the means or 

the machinery of doing sufficiently well without private assistance. The .Ursuline Academy is performing itspar.t-in this branch of the public service, and 

it should rather be encouraged by aids, than impaired 

in its usefulness by a tax upon its revenues.” 

From this case, we think it may be said that the same 

stric.tness of construction, will not be indulged where the exemption 

is to religious and educational institutions that otherwise would be 

applied in considering exemptions to corporations created and 

operated for private gain or profit. 

*We think Texas will compare favorably with any State in 

the Union in the number, efficiency, and value of educational instituttons owned and mafntained by religious organizations. Such 

schools and colleges have been fostered and built up, and it has been 

the policy of our State to encourage~them. 

It is conceded in your statement of facts that~ Jarvis 

Christian College is a non-profit educational institution supported 

by the United Christian h&ssiionary Society for the benefit of such 

members of the negro race as wish to avail themselves of the 

educational facilities offered by the college.’ It is likewise conceded that all of the land involved has for many years and is now 

dedicated and actually used for educational purposes as part of 

the campus, demonstration tracts .in agricultural’pursuits,. and 

training in reforestation courses conducted by the collegki In 

brief, all of the land is devoted to the educational. activities of the 

college. 
Hon. Murray L. Harris, page 6 (V-1568) 

The Supreme Court, in construing the language “used 

with a view to profit” in the case of Harris v. City of Fort Worth, 

supra, said: 

“Whatever may be the ordinary signification 

of the words ‘used with a view to profit,’ we think 

that in these tax exemption provisions of the statutes they mean only that the fund be not used with 

a view to private gain or profit.” 

It is admitted that the one-eighth oil royalty here involved is expended in the furtherance of the educational activities 

of the college and, we thinlc. meets the constitutional and statutory 

requirement that it is used for educational purposes and not for 

profit. 

Neither Jarvis Christian College nor the Missionary 

Society pQSSeSS the facilities to develop and produce oil from the 

land here in question even if they possessed the authority, which 

we doubt, It is, therefore, apparent that the only feasible and 

practical method of producing revenue from oil under the land was 

to execute an oil and gas lease such as was done here and leave the 

development to the lessees from which the one-eighth oil royalty is 

received by the college. We think the net result of what was accomplished by the execution of the oil and gas lease was to convey 

a determinable fee to the lessees of seven-eighths of the oil in 

place and retain the one-eighth royalty in the college or Missionary 

Society. The lessor, therefore, continued its ownership of-the surface and one-eighth of the oil under the terms of the lease. In other 

words, there remains vested in the lessor the surface and oneeighth of the oil after the execution of the oil leases. 

An oil and gas lease does not create the relationship of 

landlord and tennant. The lessor may sell such oil royalty in the 

same manner as applicable to the sale of other real estate under 

the laws of this State. Gulf Production Go. vI Warren, 99 S.W.td 

616 (Tex.Civ.App. 1936. error ref.). 

We do not deem a discussion of the doctrine of severance. 

which prevails in this State asp to oil and gas in place and the surfare 

upon the execution of an oil and gas lease essential to the determination of the question here involved. 

It is sufficient to say that Jarvis Christian College or the 

Missionary Society is the owner of the surface and everything under 

it or over’ it, in the absence of a severance of the oil and gas. under 

the surface. Therefore, upon the sale of the seven-eighths minerals 

and the retention by the lessor in the execution of an oil and gas 
. 

Hon. Murray L. Harris; page 7 (V-1568) 

lease, seven-eighths of the minerals became vested in the lessee and the college remained the’owner of the surface and oneeighth of the minerals. The ownership-and possession of the 

surface would also extend to the possession and ownership of 

one-eighth of the minerals represented by the one-eighth royalty, 

and this remains true until such minerals and the surface are 

severed one from the other. An oil and gas lease is in effect 

a sale and conveyance of the oil and gas in place under the land 

described in the conveyance and is not in fa~ct a lease in the- brdinary acception of that term. Gulf Production Company v. Warren, 

supra. But, we do not construe the cases to hold that the oneeighth royalty retained by the lessor in the usual oil and gas lease 

operates as a severance of the one-eighth mineral interest from 

the surface. The one-eighth royalty owned and retained by the 

lessor is not severed from the surface estate. It continues to 

be the property of the lessor so long as it is in place as a part of 

the realty. Wagnor v. Wichita County, 298 Fed., pp. 818, 821. 

We are, therefore, of the opinion that the exemption 

which prevails under the constitution and statutes of this state 

to the whole of the surface owned by the college or Missionary 

Society likewise extends to the one-eighth oil royalty constituting 

a part of the whole of the real estate owned by the college, and is, 

therefore, exempt from ad valorem taxes, and you ark accordingly 

so advised. 

SUMMARY 

Oil royalty produced from land owned by a nonprofit educational college, operated by a religious 

organization, is exempt from ad valorem taxes if 

produced from land comprising the campus of the 

college, all of which is used and dedicated to the educational activities of the college to the same extent 

as the surface of the land. The oil royalty retained 

by the lessor, the owner of the sur.face. constitutes 

a part of the entire ownership of the land in that there 

has not been a severance of such estate. Hence, both 

the surface and the oil royalty are exempt from ad 

valorem taxation under the constitution and statutes 
Hon. Murray L. Harris, page 8 (V-1568) 

of this State if the royalty is likewise exclusively used in promoting the educational 

activities of the college. 

APPROVED: Yours very truly, 

W. V. Geppert PRICE DANIEL 

Taxation Division Attorney General 

E. ~Jacobson 

Executive Assistant 

Charles D. Mathews 

e@Lk By , ’ 

L. P. Lollar 

First Assistant Assistant 

LPL:mw