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September 25, 1951

Hon. Robert S. Calvert Opinion No. V-&293 Comptroller of Public Accounts Austin, Texas Rc: Validity oftaxalien on mineral estate after reversion Dear Mr. Calvert: to remainderman.

Your letter requesting our opinion upon the above captioned matter reads as follows:

“We are enclosing aletter written to this Department on May 20th by W. W. Anderson, Taq AssessorCollector, Yoakum County, Plains, Tcxes;i acopy ofa letter written to Mr. Anderson by the First National Bank in Dallas, Texas, on May 17, 1951; and a copy of
aletter written toMr. W. F. Worthington; Vice President ofthe First National Bank in Dallas,,Texas, by Worsham, Forsythe iiRiley in regard tothe possible cancellation oftaxes charged against oil and gas leases and aroyalty interest for the years 1936,and 1937 on Sections 396, 397, 420 and 421 in Yoakud Ceunty. Ycu will note from the correspondence that areservation ofthe mineral interest was limited to aperiod. offifteen years, after which the interest, reverted to the fee
owners. Since the reservation offifteen years has expired, we have been requested to advise the Tax Assessor-Collector whether or not the taxes are coHectible, and whether the original tax lien against, the mineral interest is now alien against the minerals now held by the remainderman.
“Will you please advise whether or not the taxes are collectible. This Department has made no ruling
on the question and so far as we know there is no litigation pending that will determine the matter.”

vides: Section 15ofArticle VIIf ofthe Texas Constitution pro-

“The annual assessment made upon landed property shall be a special lien thereon; and all property, both real and personal, belonging to any delinquent taxpayer shall be liable to seizure and sale for the payment ofall the taxes and penalties due by such delinquent; andHon. Robert S.Calvert, Page 2(V-1293)

such property may be sold for the payment of the taxes and penalties due by such delinquent, under such regulations as the Legislature t-nayprovide.”
Under the above section of the Constitution and the statutes made in pursuance thereto, the tax collector may seize and sell personal property ofthe delinquent for the taxes due on real property, as well as personal, before resorting to the sale of the realty. Wynne v. Simmons Hardware Co., 67Tex. 40, 1S.W. 568 (1886). The tax may be collected by sale ofthe particular property onwhi,ch it is assessed by enforcing the lien, or by the sale of that or other property under ajudgment ofthe court. City ofHenrietta v. Eustis, 87Tex. 14, 26S.W. 619 (1894).

Minerals contained in land when severed from the land by aproper conveyance may be taxed separately from the land itself. State v. Downman, 134S.W. 787 (Tex. Civ. App. 1911, error ref.). :
You are therefore advised, in answer to the first portion ofyour question, that taxes assessed against amineral interest, whether it is aworking interest or aroyalty interest, although the mineral interest was limited to aperiod of 15years byvirtue ofAmineral reservation which has now expired, are collectible as the personal obligation ofthe person to whom assessed and should not be canceled by the tax assessor-collector.

The letter referred to in your opinion request sets ,forth the following fact situation:

“It appears that the taxes are delinquent for the years 1936and 1937. However, after reviewing the file
on this matter, Ido not believe that these taxes can now be legally assessed against these mineral interests which are owned by Mrs, Lillian Shook Cunningham and Mr. Robert BI Shook, for the following reason. The minerals that are assessed are the minerals that were reserved to R. H. Wellborn iu adeed dated May 1, 1933, from R. H. Wellborn to Lillian Shook Cunningham, et al. This reservation of minerals was only for aperiod of 15years from May 1, 1933, and unless oil, gas, or other minerals were discovered within said 15-year period and then for so long thereafter as said minerals
were produced in paying quantities. It appears that no production ofminerals ofany kind 

### or character was ever secured from such land andby the expressed terms ofthe reservation in the deed, such one-half reservation ofminerals in favor of R. H. Wellborn automatically expired onMay 1, 1948. By reason ofthis fact, theHon. Robert S. Calvert, Page 3(V-1293)

lien that the Tax Assessor may have had on such mineral interests likewise would have expired onMay 1, 1948. In other words, the lien for the taxes could not be any greater than the interest upon which itwas assessed. The Tax Collector could, when these taxes became delinquent in 1936and 1937. have foreclosed against R. H. Wellborn, or his assigns, upon the unexpired term ofthese interests, but could not have forcclosed upon any greater interest. Since these interests all expired onMay 1, 1948, the lien for taxes cannot in my opinion be assessed against the Shooks. who
now own the property, because the assessment was not made against the Shook8 originally or against their interest, but simply against the limited term of 15years reserved by R. H. Wellborn.”

It appears from our investigation that there are two distinct systems ofadvalorem taxation in effect in different states. In aportion ofthe states the rule announced by the courts in construing the statutes ofthose states is that lands shall be valued AS
awhole,, irrespective ofthe separate estates that individuals may own in them. In those states the person who enjoys the possession ofthe real estate, as well as the profits, is charged with the tax. In other states, by reason ofthe wording of the taxing statutes, separate estates in real estate are separately assessed and collected. 3Cooley, Taxation (4th Ed, 1924) 2936. In stating the rules, Cooley
uses the following language:

‘“The legislature has power to provide either that the tax-sale shall create anew title cutting off all prior liens, encumbrances and interests, or to provide that the tax purchaser shall acquire the interest only ofthe person inwhose name the land was assessed or ofthe real owner. Observing the statutory directions and precautions, and the principles ofthe common law and ofpublic policy, towhich reference has been made, the officer may transfer to the purchaser the full interest in the land which has been assessed, and may convey Acomplete and perfect title if such is the provision of law on the subject,as in many states is the case. [Here
are cited numerous cases from various states; however, Texas is not cited as astate that comes within that category.] Indeed, it has been said that ‘The prevailing opinion seems to be that atax title is anew title, and not merely the sum of old titles.’ Generally atax-title divests all interests inthe land sold and vests in the grantee an independent and paramount title. Where the whole title is sold it cuts off and divests estates in remainder or reversion, rent charges, trust estates. home-Hon. Robert S. Calvert, Page 4 (V-1293)

stead interests, inchoate rights ofdower, mortgages and other encumbrances, judgment liens, and even back taxes and tax-titles, unless other provision is made: but in some states the sale is only ofthe title whichthe person taxed had at the time, while in others nothing passes but the title and interest ofthe parties who were made defendants to thejudicial proceedings anterior to the sale. Where the distinct interests ofdifferent
owners are assessed separately, a sale ofthe land for
atax against one does not cut off the interests ofothers.
.~*“
The rule as to the nature or quantum ofestate acquired by the purchaser at atax sale is stated in an annotation in 75A.L.R. 416 as follows:

“There are two opposing theories as to the effect ofatax sale and the nature or quantum ofestate acquired by the purchaser. They are thus summarized by Malcolm, J., in Philippine Islands v. Adrian0 (1920) 41 Philippine, 112: ‘There are two distinct doctrines
on the subject ofwhat passes by the sale ofproperty for back taxes. In many states where the tax is a charge on the land alone, where no resort in any event is contemplated against the owner or his personal estate, 

### and where the proceeding is strictly in rem, the title conveyed by a sale for nonpayment of taxes is not merely the title ofthe person who had been assessed for the taxes and had neglected to pay them, butanew and paramount title to the land infee simple absolute, created by an independent grant from the sovereign, and free from all equities and encumbrances existing prior to the sale upon the title ofthe previous owner. According to this view, the tax title is abreaking up of all titles, and operates not to support but todestroy them, It is anew and perfect title emanating from the state, and not merely the sum of old titles. The second doctrine, prevailing in other jurisdictions where the proceedings for the collection of taxes upon real estate are looked upon as in personam, is that the purchaser at the tax sale gets nobetter title than was held by the person assessed. According to this view, where the law requires the land tobe listed in the name ofthe owner, provides for apersonal demand for the tax, and, in case ofdefault, authoriaes the seizure ofthe personal property ofthe delinquent in satisfaction of the tax, and permits a sale ofthe land only when all other remedies have been exhausted, the title is aderivative one, and the purchaser acquires only the p,pparent interest, whatever it is, ofthe tax delinquent.Hon. Robert S. Calvert, Page 5(V-1293)

In State v, Campbell, 41 SW. 937, 938 (Tent-i. Sup. 1897), there is a complete discussion of these two systems ofad valorem taxation. The Tennessee Supreme Court, applying the derivative title and separate assessment rule, concludes:

““So,then; the purchaser at atax sale can only acquire such interest derivatively as the tax debtor had in the land, It is obvious the state cannot sell the interests ofremainder-men In such lands, against whom no tax has been assessed. If the state can sell such interests it is obvious the purchaser at such tax sale would acquire all interests the state could sell. But we have seen that, under the ruling in City of Nashville v. Cowan, the purchaser only acquires such interest as the tax delinquent owned in the land, ‘x&hout prejudice to the rights ofother parties, such as remainder-men, mortgagees, or other incumbrancers.’ Again, it is settled in this state that atax on land, when imposed, becomes adebt ofthe taxpayer, for which a suit may be brought as upon any other debt. Mayor, etc., V.McKee, 2Yerg. 167; Rutledge v. Fogg, 3Cold. 568,”

We have been unable to find any Texas decisions directly in point upon the question before us, but by reason ofthe following statutes and decisions ofthis State, it is our opinion that Texas has ranged itself with those states whose legislation has been framed to give th$epurchaser at atax sale only aderivative title. We are aware ofthe opinion by the Supreme Court ofTexas in Danciger v. State, 140Tex. 252, 166S.W.%d 914 (1942), which held that the State would not be entitled to have a sale under execution of other property ofthe tax debtor until it had exhausted its remedy under the order ofsale. However, we do not deem this to be controlling in that inTexas a suit for advalorem taxes is not a suit strictly in rem, and a personal judgment can be secured against the tax debtor and any property ofthe tax debtor subject to execution may be levied upon,

Section 7ofArticle 7345b, V.C.S., provides:

“In the case offoreclosure, an order ofsale shall issue, and, except as herein otherwise provided, the land shall be sold thereunder as in other cases of foreclosure oftax liens.*
Article 7328, V.C.S., provides, in part, as follows:

m00

.and in case offoreclosure an order of sale shall issue and the land sold thereunder as in other
cases offoreclmsure~ n 0

.0aHon. Robert S. Calvert, Page 6(V-1293)

Article 3816, V.C.S., provideo:
“When asale has been made and the terma thereof complied with, the officer shall execute and deliver to the purchaser a conveyance ofall the right, title, interest and claim which the defendaat in execution had in and to the property ssld.”
The regular printed form of deeds used intax forcclosure suits inTexas contains the provision that only the right, title and interest ofthe defendant in the tax suit is being conveyed. This clearly shows the construction placed upon our turstfan statutes by those charged with the collection of advalorem taxes.

The opinion ofthe 

### Supreme Ceurt ofTexas inthe early
case of Yenda v. Wheeler, 9Tex. 406 (1853). clearly indicates that the purchaser at atax sale In Texas receivaa only aderivative title. This case has been followed 

### ia principle by other Texas
cases. Sanchez v. Hillyer-Deutrch-Jarratt Co., 27S.W.2d 634(Tex. Civ. App. 1930, error ref 22S.W.Zd 688, 692 (Tex.

“It was recited in the petitim ofthe state, upon which the taxjudgment was based, ‘that the defendants
are now in possession 

### ofand are,claiming and asserting ownership to all the land set.out and described.’ We agree with appellees that the state and all parties holding under the taxjudgment are bound by all the recitations in this petition, and that appellant has not acquired, under the foreclosure sale, the title ofany person not aparty tothat proceeding, and not embraced within the term “unknown owners,’ nor the title ofany owner in actual or visible possession ofthe land.”

It is clear from the above cited Texas cases, as well
as from the wording of our tax statutes, that atax foreclosure suit inTexas is not strictly in rem; that apurchaser at atax foreclosure sale in Texas does not receive anew and paramount title to the land infee simple absolute, created by anindependent grant from the sovereign, free from all equities and encumbrances upon the title ofthe previous owner, existing prior to the sale.

Where there has been a severance ofthe minerals in
a tract ofland for a limited term ofyears, either by deed or reservation, there are created two separate and distinct interests in the land which are subject to taxation. Sheffield v. Ho 290, 77S.W,2d 1021 (1934), The owner term ofyears should render his interest for taxation at its true market value, which value would be less than ifhe owned the minerals in fee. At the same time the owner ofthe fee should render.. .

Hon. Robert S. Calvert, Page 7(V-1293)

the surface for taxation, together with the value ofthe reversionary interest that he owns in the minerals, The owner ofthe sur**face**would have the right to dispose ofsuch reversionary interest, and ifhe alienated it, the person acquiring the reversionary interest would have an interest in real estate subject to taxation. It is apparent that the surface estate in the land would have agreater value by reason ofthe limitation imposed upon the mineral interest, in that the mineral interest would revert to the owner 

### ofthe surface upon the termination ofthe term ofyears imposed upon the mineral estate. The value 

### ofthe mineral estate will necessarily decrease as its term nears an end. while at the same time the value ofthe surface will be enhanced in a like amount. These facts should be taken into consideration invaluing the mineral estate as well as the surface estate. O’Connor Y. Quintana Petroleum Co., 134Tex. 179, 133S.W.2d 112 (1939).

Article 7146, V.C.S., provides:

“Real property for the purpose oftaxation, shall be construed to include the land itself, whether laid out in town lots or otherwise, and all buildings, structures and improvements, or other fixtures 

### ofwhatsoever kind thereon, and all the 

### rights and privileges belonging or inany wise appertaining thereto, and all mines, minerals, quarries and 

### fossils in and under the same.((
The Commission ofAppeals inElectra Independent School District v. W. T. Waggoner Estate, I40 Tex. 483 168S.w. ,: Zd 645 649 (1943) ’ in an opinion adopted-by the Suprem: Court, after q)uoting Artille 7146, w, said:

“Under the statute quoted it has been held that
a conveyance **of**oil and gas in place in the ground is 

### an interest in realty which is subject to taxation in the hands ofthe grantee. Texas Co. v. Daughtrty, 107Tex. 226, 176S.W. 717, L.R.A. 1917F. 989; Stephens Countyv. Mid-Kansas Oil &Gas Co., 113Tex.-160, 254 S.W. 290, 29A.L.R. 566. Ithas been held that minerals contained in land when severed from the land by aproper conveyance may be taxed separately from the land itself, State v, Downman, Tex. Civ. App., 134S.W. 787, writ refused; Downmsn v. State, 231U.S. 353, 356, 357, 34 S.Ct. 62, 58L.EX. 265. Royalty interests in oil and gas acquired under instruments conveying minerals in place are taxable as realty. Federal Royalty Co. v. State, Tex. Civ. App., 42 S.W.2d 670; Sheffield v. Hogg, 124Tex. 290, 77S.W.2d 1021; Id., 1.24Tex. 290. 80S. W.2d 741...,’

,“. .,

Hon. Robert 5. Calvert,, Page B(V-&%93)

“Article 7144 of**Vernen ’** **n Amot.Wzd**  CiviI Statutes ofTexas, provides bow zeal e6Ws **sbauld** be ran**de2Wd fQF**  t#lslutiOZS. **‘ I.**  **Tha uamu**  **of the**  **@armerr abrtrmt**  number, number ofsurvey, theaumber afthe certificate, the name ofthe original grantee, the number of acres, and the true and full value thereof. 2. ,,.. ’

“It has been decided by this **Court t&at**  **the** lien provided by Section I5 of Article 8ofthe Constitution ofTexas, Vernon’s Ann. St., and deciaxatsry statutes **gutacted** pclrsusnt thereto attaches only toeach aeparate tract or parcel ofland for the taxes asSes6ed agatu:t it. Richey v. Moor, 112**Ttx.** 493, **249** S.W. **172.**

**. .**  **.**
**Article 7328,**  V.C.S., provides, h part:

“The progex perPoas, including al1record lien br.?ide~rs,shalt be made partis defendant in 6uCh outt

. .. Where the mineml Inters& wa6 **separately** assessed agaiast the **owner** and **the** revrrefc+eny interest was or should have been separately aeSe66ed s&n6t the **tsmeindesmaa,** the lien provided for in Section 15sdArticle YIfl ofthe Texas Comtituticn **we&d at&&**  **only to**  **the tnhOrai**  iCteCu6t tarsthe tax66 as8essed **against** it; and the owner of the minerals,, together **with** the record lien **holders,** if any, would be the aaly praper or necessary parfle in a euit toforeclor,e tk6 conetit@ttial and statutory lien. The remeinderwm 

### would **bo** aeitbea **6 ptopor**  **war a** necessary **psrty. In**  such asuit, ifbrought bythe State lrofore the expiration of the **dn** erat estate, the parcharor atthe tax foreeioxiure would **acquire only**  wlzrtever interest the dsfemkwt baa in **the**miaeral6, and upon the expiration of the miners1 estate his tex titke wouid terminate. If **the State**  **delays brin$hq**  **a srsit** 

## l pinst the perron who owned alimited mineral estate until such time a6 the minerals had passed to 

### the remsindermtin, the State theruby loses its lien upon the property.

**Y#u** are therekwe **advhrd, in**  l**asrler to** the second portion ofyour questioa, that **the tw**  **lien rgainrt**  **a minePat**  **inter** est which wa6 limited toa**term** of 35years er as Ioag thereafter a6 oil aad gas is being produced from the land, which mineral intere6t has sxplred by St6own terms, is not a lien that can **be en**  fercad against the minerals held by the ramaioderman.. .

’

APPROVED:

Everett Hutchinson Executive Assistant

c Price Daniel

Attorney General Hon. Robert S. Calvert, Page 9(V-1293)

SUMMARY

Taxes assessed against mineral interests severed from the fee for alimited duration should netbe canceled after the expiration of the mineral term, as the owner is personally liable for the taxes, Tex. CowLArt, VIfI, Sec. 15. The tax lien against amlnoral interest severed from the fee for alimited duration cannot be enforced against the minerals owned and held by the remainderman, either before er after the mineral interest has expired by its own terms.

**Yours, very**  **truly,**
PRICE DANIEL Attorney Goners1

WVG/mwb **W. V.**  **Geppert Amidant** 

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