:re;mrteci in349 S. W. 26 640, 

error ref., N. R. E. 

Hon. George II. Sheppard 

Comptroller of Public 

Accounts 

Austin, Texas 

Dear Sir: 

Opinion NO. O-4613 

Re: Questions relating to ad 

valorem tax liability as a result of the acquisition of real 

estate by the United States 

Government, and related questions. 

We have received and considered yourrequest for 

an opinion from this department. Since the letter, attached 

to your request, contains the questions in detail, we quote 

from the same as follows: 

“In connection with the acquisition of lands 

by the United States and its various agencies 

both by purchase and by condemnation, it has geen 

the practice in some cases for such lands to be 

acquired in the name of the United States and 

thereafter conveyed to some agency such’as the 

Defense Plant Corporation, a subsidiary of the 

Reconstruction Finance Corporation. In view of 

existing Federal Statutes (Sec. 610 of Title 15, 

U.S.C.A.) there would be no problem if the property is owned by one of these agencies on January 

1st of any given year since the property would be 

subject to taxation. 

“We are confronted, however, with several 

problems on which we would like to have an authoritative comment from your office. Briefly these may 

be set up as coming under the following general 

questions: 

“A proper judgment of the District Court of 

the United States vests title in fee simple to a 

tract of land as of December 23, 1941, and under 

the terms of the decree all claimants and lien holders, etc., have their claim for compensation as their 

respective interests appear. As of January 1 

the United States of America was the fee i 

1942, 

simp e owner. 

The tract in question was acquired for the purpose Of 

constructing a magnesium plant and at the time of the 
Hon. George H. Sheppard, page 2 

acquisition it was planned that the United States 

of America would in due course convey the property 

to the Defense Plant Corporation. 

"QUESTION: Is such property subject to taxation for the year 1942 by the various taxing agencies? 

2. 

"Assume the same facts as in (1) foregoing, 

except that title w'as vested in the United States 

after January 1, 1942 and prior to April 1, 1942. 

"QUESTION: Is such property subject to taxation for the year 1942 by the various taxing agencies? 

ItA tract owned by an individual is delinquent 

to the State and County for a number of years prior 

to the year 1929, It is also delinquent for the 

years 1929, 1930 and 1931. Assuming compliance by 

the Tax Collector of the preliminary requirements, 

a suit is filed on August 1, 1932 against the record owner and all necessary and proper parties as 

defendants asking for judgment for the taxes for 

the years 1929, 1930 and 1931 only and for a foreclosure. This suit is brought to fruition in a 

final judgment and following a regular order of 

sale, legal levy and notice, the property is sold 

at public auction as required by law and bid in by 

an individual who had had no previous connection 

with the land or the suit. & regular sheriff's deed 

is delivered to the purchaser following his payment 

of his bid. 

"QUESTION: (a) Assuming that the purchaser 

bid and paid the full amount of the judgment, interest and costs of court, are the taxes for the years 

previous to the year 1929 still a charge against the 

iana? 

“(b) Assuming that the purchaser bid and paid 

an amount less than the amount of the judgment, interest, and costs, are the taxes for the years previous to 1929 still a charge against the land? 
-- . /? 

Hon. George H. Sheppard, page 3 

4. 

“Assume the same~facts as are set out in 

(3) foregoing, except that included in the suit 

and final judgment are the taxes for all years 

that are delinquent and at the sale the purchaser bids and pays only an amount equal to a portion of the amount sued for. A regular deed is 

delivered to him by the sheriff., 

“QUESTION.: Are taxes for any of the years 

sued for a charge upon the property. 

what extent;? 

If so, to 

5. 

“An individual owner makes an offer to the 

United States in the form of an option to sell a 

‘place of property at a fixed price, agreeing that 

the United States may immediately take possession of the property while the title is being examined, and if condemnation,be necessary, agreeing that the price shall remain as fixed. This 

offer is dated November 5, 1941 and is accepted 

by the duly authorized agent of the United States 

after January 1, 1942. However, the United States 

has taken exclusive possession of the property and 

begun improvements thereon immediately following 

the date of the offer, on November 6, 1941. The 

title is Sound acceptable and a~ deed to the property is delivered to the United States on February 

15, 1942. 

‘lQUESTIOK: Is the property in question subject to taxation for the year 1942 by reason of 

the fact that the legal owner thereof on January 

1, 1942 was an individual? 

6. 

“Assume the facts as in (5) foregoing, except 

that after January 1, 1942 the title is found to be 

defective as a merchantable title, although it is in 

fact an indefeasible title by reason of long possession, and the United States institutes a condemnation 

proceeding and procures a valid judgment vesting title in the United States. 
Hon. George H. Sheppard, pege 4 

“QUESTION: Is the property in question subject to taxation for the year 1942 by reason of 

the fact that the legal owner thereof on January 

1, 1942, was an individual?” 

Article 7151, Revised Civil Statutes of Texas, 1925, 

provides as follows: 

“All property shall be listed for taxation 

between January 1st and April 30th of each year, 

when required by the assessor, with reference to 

the quantity held or owned on the first day of 

January in the year for which the property is required to be listed or rendered. . . .‘I 

By virtue of the provisions of this statute the ownership of property on the 1st day of January of any year creates a liability on the part of the owner for taxes levied upon 

such property for that year; Humble Oil & Refining Company v. 

State (Civ.App.) 3 S.W.(2d) 559, Winters v. Independent School 

District of Evant, (Civ.,App.) 208 S.W. 574, and the sale of 

such property shortly thereafter does not affect the rule. Childress County v. State, 127 Tex. 343, 92 S.W.(2d) 1011. 

Whether a particular piece of property is exempt from 

taxation or not depends upon its ownership on the date as of 

which the taxes are assessed, and if, after such date, but before the taxes are paid, the property is taken by eminent domain 

or bought by body politic or corporate, the property of which is 

exempt from taxation, the tax as originally assessed is valid 

and specific, and the person who owns the property on the date 

as of which the tax was assessed is legally bound to pay it.. 26 

R.C.L. 299. 

In our opinion No. O-4749 we held that tax liability 

for all state, county 

i 

common school district and. independent 

school district ad va orem taxes was determined by property ownership as of January 1st of the year for which the taxes are assessed. In the same opinion we held that property acquired during the month of March of 1942 by the Federal Government for the 

purpose of constructing a military flying school should be assessed for school taxes as of January 1st of this year; that the 

owner of the property on that date was personally liable for the 

payment of the taxes; and, that the statutory and constitutional 

lien was not extinguished because the Federal Government acquired 

the property but rather became unenforceable by the taxing unit 

so long as the Federal Government owned the property unless permission was given by Congress to bring an action against the 
Hon. George H. Sheppard, page 5 

Federal Government to foreclose the tax lien. A copy of said 

opinion No. O-4749 is enclosed for your information. 

Since the que,stion pf,liability or exemption from 

ad valorem taxes under the laws of this State turns upon ownership as of January 1st of the year for which the tax, under 

the law, is to be assessed, it follows, therefore, that if the 

United States Government was in fact the owner, in fee simple, 

of the property as of January 1 

propert i 

1942, the government and the 

c 

would be exempt from a 1 ad valorem taxes for the 

year 19 2, provided the United States held the title to the 

property throughout the year 1942. We quote from 40 Texas Jurisprudence, page 24, as follows: 

“The state has no power to tax either the property of the United States situated in Texas, or the 

property here of the Federal agency or ir&rumentality, or the conduct of any business insofar as it 

is used as an instrumentality of the United States 

Government .I# 

I 

The fact that the Federal Government planned to convey, but did 

not actually convey, the property to the Defense Plant Corporation at some date subsequent to January 1 1942, would not change 

the rule announced in the foregoing quota t ion. However, if the 

United States Government conveyed the property to the Defense 

Plant Corporation at any time during the year 1942, then we call 

your attention to that part of Article 7151, supra, which reads 

as follows: 

II 

speciai ia; 

If any property has, by reason of any 

, contract or fact, been exempt or has 

been claimed to be exempted from taxation for any 

period or limit of time, and such period of exemption shall expire between January 1, and December 

31 of any year, said property shall be assessed and 

listed for taxes as other property; but the taxes 

assessed against said property shall be for only 

the pro rata of taxes for the portion of such year 

remaining. tl 

In this connection we direct your attention to the pertinent part 

of Section 610 of Title 15 U.S.C.A., as amended June 10, 1941, 

Ch. 190, Sec. 3, 55 Stat. 348, which provides: 

n . The corporation shall be exempt 

from ak’taxation now or hereifie; imposed by the 

United States, by any Territory, dependency, or 

.possession thereof, or by any State, county, municipality, or local taxing authority; exceot that 
--. 

Hon. George H. Sheppard, page 6 

any real property of the corporation shall be subject to State, Territorial, county. munl IDaL or 

local taxation to the same extent accord& to 

its value as other o wertv 1 taxed 

tions wrovided for ITthe wrezedinn 

The exemplentence with 

respect to taxation . . . shall be-construed to 

be applicable not only with respect to Reconstruction Finance Corporation but also with respect to 

(1) the Defense Plant Corporation . . . Such exemptions shall also be construed to be applicable 

to the loans made, and personal property owned, by 

the Reconstruction Finance Corporation or by any 

corporation referred to in Clause (11, (2) or (3) 

of the preceding sentence, but such exemptions 

shall not be construed to be applicable in any 

State to any buildings which are considered-by the 

laws of such State to be personal property for taxation purposes.n (Underscoring ours) 

From the foregoing consideration we answer your first 

question by saying that such property is not subject to taxation for ad valorem taxes for the year 1942 by the various taxing units of this State which determine tax liability based 

upon ownership as of January 1, 1942. If, however, the United 

States conveys the property to the Defense Plant Corporation 

at any time between January 1 and December 31, 1942, then said 

Defense Plant Corporation becomes liable for and may be assessed for the pro rata of taxes for the portion of the year 1942 

remaining. 

In view of what we have said above in connection with 

your first question, we think there can be no doubt that the 

owner of the property would become personally liable and the 

constitutional and statutory lien become fixed, under the facts 

submitted in your second question, for all ad valorem taxes for 

the year 1942 to the various taxing units in this State which 

determine tax liability based upon ownership as of January 1, 

1942. It would be immaterial at what time during the year, after January lst, the title to the property passed to the United 

States. Your second question is answered in the affirmative. 

We think our opinion No. O-4779 a copy'of which is 

enclosed, answers all of the matters subm 1 tted in your third 

question. 

After a careful consideration of your fourth question 

we have decided that you have not given us sufficient facts from 

which we can accurately advise you. The question there presented 

calls for a very thorough examination of all the facts surrounding the sale. 
Hon. George Ii. Sheppard, page 7 

In 

attention to 

pages 98 and 

I, 

0 

operate 

connection with your fifth question we call your 

the rule announced in 43 Texas Jurisprudence, 

99, which reads as follows: # 

* . It is obvious that an option does not 

as a conveyance of any interest or title . - . . in property. In giving an option the optionor does 

not sell his property nor agree to do so; he merely 

sells a privilege or right to buy it. Mor does the 

option bind the optionee to purchase; it is binding 

upon the optionor alone, until such time as the 

optionee accepts and exercises it." 

It is obvious, therefore, that the actual fee simple title 

would remain in the optionor and be vested in him as of January 

1, 1942. Applying the rules which we have heretofore discussed, 

your fifth question is, therefore, 

affirmative. 

specifically answered in the 

We think the same reasoning must be applied, in answering your sixth question, 

question. 

that we used in answering your fifth 

For the reasons expressed above your sixth question 

is specifically answered in the affirmative. 

We trust that the foregoing satisfactorily 

questions submitted in your inquiry. 

APPROVED OCT 20, 1942 

/s/ Gerald C. Mann 

ATTORNEY GENERAL OF TEXAS 

Yours very truly 

ATTORNEY GENERAL OF TEXAS 

answers the 

APPROVED: OPINION COMMITTEE 

BY: BWB, Chairman 

HMC:db:wb 

By /s/ Harold McCracken 

Harold McCracken, Assistant 

Enclosures