- - 

September 25, 1951 

Hon. Robert S. Calvert Opinion No. V-&293 

Comptroller of Public Accounts 

Austin, Texas Rc: Validity of tax alien 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 a letter written to this Department on May 20th by W. W. Anderson, Taq AssessorCollector, Yoakum County, Plains, Tcxes;i a copy of a 

letter written to Mr. Anderson by the First National 

Bank in Dallas, Texas, on May 17, 1951; and a copy of 

a letter written to Mr. W. F. Worthington; Vice President of the First National Bank in Dallas,,Texas, by 

Worsham, Forsythe ii Riley in regard to the possible 

cancellation of taxes charged against oil and gas leases 

and a royalty interest for the years 1936 ,and 1937 on 

Sections 396, 397, 420 and 421 in Yoakud Ceunty. Ycu 

will note from the correspondence that a reservation 

of the mineral interest was limited to a period. of fifteen years, after which the interest, reverted to the fee 

owners. Since the reservation of fifteen 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 a lien 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 15 of Article VIIf of the 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 

of all the taxes and penalties due by such delinquent; and 
Hon. 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-nay provide.” 

Under the above section of the Constitution and the 

statutes made in pursuance thereto, the tax collector may seize 

and sell personal property of the 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., 67 Tex. 40, 1 S.W. 

568 (1886). The tax may be collected by sale of the particular 

property on whi,ch it is assessed by enforcing the lien, or by the 

sale of that or other property under a judgment of the court. City 

of Henrietta v. Eustis, 87 Tex. 14, 26 S.W. 619 (1894). 

Minerals contained in land when severed from the land 

by a proper conveyance may be taxed separately from the land itself. State v. Downman, 134 S.W. 787 (Tex. Civ. App. 1911, error 

ref.). : 

You are therefore advised, in answer to the first portion of your question, that taxes assessed against a mineral interest, whether it is a working interest or a royalty interest, although 

the mineral interest was limited to a period of 15 years by virtue 

of A mineral reservation which has now expired, are collectible as 

the personal obligation of the 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 1936 and 1937. However, after reviewing the file 

on this matter, I do 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 a deed dated May 1, 1933, 

from R. H. Wellborn to Lillian Shook Cunningham, et 

al. This reservation of minerals was only for a period 

of 15 years 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 of minerals of any kind or character was 

ever secured from such land andby the expressed terms 

of the reservation in the deed, such one-half reservation of minerals in favor of R. H. Wellborn automatically expired on May 1, 1948. By reason of this fact, the 
Hon. Robert S. Calvert, Page 3 (V-1293) 

lien that the Tax Assessor may have had on such mineral interests likewise would have expired on May 1, 

1948. In other words, the lien for the taxes could not 

be any greater than the interest upon which it was assessed. The Tax Collector could, when these taxes 

became delinquent in 1936 and 1937. have foreclosed 

against R. H. Wellborn, or his assigns, upon the unexpired term of these interests, but could not have forcclosed upon any greater interest. Since these interests all expired on May 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 15 years 

reserved by R. H. Wellborn.” 

It appears from our investigation that there are two 

distinct systems of ad valorem taxation in effect in different states. 

In a portion of the states the rule announced by the courts in construing the statutes of those states is that lands shall be valued AS 

a whole,, irrespective of the separate estates that individuals may 

own in them. In those states the person who enjoys the possession 

of the real estate, as well as the profits, is charged with the tax. 

In other states, by reason of the wording of the taxing statutes, separate estates in real estate are separately assessed and collected. 

3 Cooley, 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 a new title cutting off all prior 

liens, encumbrances and interests, or to provide that 

the tax purchaser shall acquire the interest only of the 

person in whose name the land was assessed or of the 

real owner. Observing the statutory directions and 

precautions, and the principles of the common law and 

of public policy, to which reference has been made, the 

officer may transfer to the purchaser the full interest 

in the land which has been assessed, and may convey 

A complete 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 a state that comes within that category.] Indeed, it has been said that ‘The prevailing 

opinion seems to be that a tax title is a new title, and 

not merely the sum of old titles.’ Generally a tax-title 

divests all interests in the 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 of dower, 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 of the title whichthe 

person taxed had at the time, while in others nothing 

passes but the title and interest of the parties who were 

made defendants to the judicial proceedings anterior 

to the sale. Where the distinct interests of different 

owners are assessed separately, a sale of the land for 

a tax against one does not cut off the interests of others. . ~ *“ 

The rule as to the nature or quantum of estate acquired by the purchaser at a tax sale is stated in an annotation in 

75 A.L.R. 416 as follows: 

“There are two opposing theories as to the effect of a tax sale and the nature or quantum of estate 

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 of what passes by the sale of property 

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 of the person who had been assessed 

for the taxes and had neglected to pay them, but a new 

and paramount title to the land in fee 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 of the previous owner. 

According to this view, the tax title is a breaking up of 

all titles, and operates not to support but to destroy 

them, It is a new 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 no better title than was held 

by the person assessed. According to this view, where 

the law requires the land to be listed in the name of the 

owner, provides for a personal demand for the tax, and, 

in case of default, authoriaes the seizure of the personal property of the delinquent in satisfaction of the tax, 

and permits a sale of the land only when all other remedies have been exhausted, the title is a derivative one, 

and the purchaser acquires only the p,pparent interest, 

whatever it is, of the 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 of ad 

valorem taxation. The Tennessee Supreme Court, applying the 

derivative title and separate assessment rule, concludes: 

““So, then; the purchaser at a tax sale can only 

acquire such interest derivatively as the tax debtor 

had in the land, It is obvious the state cannot sell the 

interests of remainder-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 of other parties, such as 

remainder-men, mortgagees, or other incumbrancers.’ 

Again, it is settled in this state that a tax on land, when 

imposed, becomes a debt of the taxpayer, for which a 

suit may be brought as upon any other debt. Mayor, 

etc., V. McKee, 2 Yerg. 167; Rutledge v. Fogg, 3 Cold. 

568,” 

We have been unable to find any Texas decisions directly in point upon the question before us, but by reason of the 

following statutes and decisions of this State, it is our opinion that 

Texas has ranged itself with those states whose legislation has 

been framed to give th$e purchaser at a tax sale only a derivative 

title. We are aware of the opinion by the Supreme Court of Texas 

in Danciger v. State, 140 Tex. 252, 166 S.W.%d 914 (1942), which 

held that the State would not be entitled to have a sale under execution of other property of the tax debtor until it had exhausted its 

remedy under the order of sale. However, we do not deem this to 

be controlling in that in Texas a suit for ad valorem taxes is not a 

suit strictly in rem, and a personal judgment can be secured against 

the tax debtor and any property of the tax debtor subject to execution may be levied upon, 

Section 7 of Article 7345b, V.C.S., provides: 

“In the case of foreclosure, an order of sale 

shall issue, and, except as herein otherwise provided, 

the land shall be sold thereunder as in other cases of 

foreclosure of tax liens.* 

Article 7328, V.C.S., provides, in part, as follows: 

m 0 0 . and in case of foreclosure an order of sale 

shall issue and the land sold thereunder as in other 

cases of foreclmsure~ n 

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

Article 3816, V.C.S., provideo: 

“When a sale has been made and the terma 

thereof complied with, the officer shall execute and 

deliver to the purchaser a conveyance of all 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 in tax forcclosure suits in Texas contains the provision that only the right, title 

and interest of the 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 ad valorem taxes. 

The opinion of the Supreme Ceurt of Texas in the early 

case of Yenda v. Wheeler, 9 Tex. 406 (1853). clearly indicates that 

the purchaser at a tax sale In Texas receivaa only a derivative 

title. This case has been followed ia principle by other Texas 

cases. Sanchez v. Hillyer-Deutrch-Jarratt Co., 27 S.W.2d 634(Tex. 

Civ. App. 1930, error ref 

22 S.W.Zd 688, 692 (Tex. 

“It was recited in the petitim of the state, upon 

which the tax judgment was based, ‘that the defendants 

are now in possession of and 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 tax judgment are bound by all the 

recitations in this petition, and that appellant has not 

acquired, under the foreclosure sale, the title of any 

person not a party to that proceeding, and not embraced 

within the term “unknown owners,’ nor the title of any 

owner in actual or visible possession of the land.” 

It is clear from the above cited Texas cases, as well 

as from the wording of our tax statutes, that a tax foreclosure suit 

in Texas is not strictly in rem; that a purchaser at a tax foreclosure sale in Texas does not receive a new and paramount title to 

the land in fee simple absolute, created by an independent grant 

from the sovereign, free from all equities and encumbrances upon 

the title of the previous owner, existing prior to the sale. 

Where there has been a severance of the minerals in 

a tract of land for a limited term of years, 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, 77 S.W,2d 1021 (1934), The owner 

term of years should render his interest for taxation at its true 

market value, which value would be less than if he owned the minerals in fee. At the same time the owner of the fee should render 
. . . 

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

the surface for taxation, together with the value of the reversionary interest that he owns in the minerals, The owner of the surface would have the right to dispose of such reversionary interest, 

and if he 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 a greater 

value by reason of the limitation imposed upon the mineral interest, in that the mineral interest would revert to the owner of the 

surface upon the termination of the term of years imposed upon 

the mineral estate. The value of the mineral estate will necessarily decrease as its term nears an end. while at the same time the 

value of the surface will be enhanced in a like amount. These 

facts should be taken into consideration in valuing the mineral estate as well as the surface estate. O’Connor Y. Quintana Petroleum Co., 134 Tex. 179, 133 S.W.2d 112 (1939). 

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

“Real property for the purpose of taxation, 

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 

of whatsoever kind thereon, and all the rights and 

privileges belonging or in any wise appertaining thereto, and all mines, minerals, quarries and fossils in 

and under the same.(( 

The Commission of Appeals in Electra Independent 

School District v. W. T. Waggoner Estate, I40 Tex. 483 168 S .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 of the grantee. Texas Co. v. Daughtrty, 107 Tex. 

226, 176 S.W. 717, L.R.A. 1917F. 989; Stephens County v. Mid-Kansas Oil & Gas Co., 113 Tex.-160, 254 S.W. 

290, 29 A.L.R. 566. It has been held that minerals contained in land when severed from the land by a proper 

conveyance may be taxed separately from the land itself, State v, Downman, Tex. Civ. App., 134 S.W. 787, 

writ refused; Downmsn v. State, 231 U.S. 353, 356, 357, 

34 S.Ct. 62, 58 L.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, 

124 Tex. 290, 77 S.W.2d 1021; Id., 1.24 Tex. 290. 80 S. 

W.2d 741. 
..,’ ,“. ., 

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

“Article 7144 of Vernen’n Amot.Wzd CiviI Statutes of Texas, provides bow zeal e6Ws sbauld be rande2Wd fQF t#lslutiOZS. ‘I. Tha uamu of the @armerr abrtrmt 

number, number of survey, the aumber af the certificate, the name of the 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 8 of the Constitution 

of Texas, Vernon’s Ann. St., and deciaxatsry statutes 

gutacted pclrsusnt thereto attaches only to each aeparate tract or parcel of land 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 al1 record 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 15 sd Article YIfl of the Texas Comtituticn 

we&d at&& only to the tnhOrai iCteCu6t tars the 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 to foreclor,e tk6 conetit@ttial and statutory lien. The remeinderwm would bo aeitbea 6 ptopor war a necessary psrty. In 

such a suit, if brought by the State lrofore the expiration of the dnerat estate, the parcharor at the 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 a limited 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 of your questioa, that the tw lien rgainrt a minePat interest which wa6 limited to a term of 35 years er as Ioag thereafter 

a6 oil aad gas is being produced from the land, which mineral intere6t has sxplred by St6 own terms, is not a lien that can be enfercad 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 a limited duration should net be 

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 a mlnoral interest severed from the fee for a limited 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 

;